Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156657
Authors: 
Ederer, Stefan
Reschenhofer, Peter
Year of Publication: 
2016
Series/Report no.: 
WIFO Working Papers 509
Abstract: 
This paper assesses whether or to what extent the macroeconomic imbalances, which emerged in the "North" and "South" of the European Monetary Union before the financial and economic crisis of 2008/09, are symmetric. First, we show that the imbalances stemmed from different growth patterns and quantify the contributions of foreign and domestic demand to GDP growth in the EMU countries. Second, we calculate bilateral exports and imports between all EU member states, applying the concept of "trade in value added", and discuss their role in the emergence of trade surpluses and deficits. Third, we quantify to what extent an increase in domestic demand in the North and a decrease in the South would support the elimination of these imbalances. Finally, we calculate a hypothetical scenario in which final demand expands to such extent that all intra-EMU trade is balanced. We thereby evaluate whether or to what extent the macroeconomic imbalances can be eliminated by demand adjustments in the EMU countries.
Subjects: 
European Monetary Union
macroeconomic imbalances
global value chains
input-output analysis
JEL: 
C67
E60
F14
F15
Document Type: 
Working Paper

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