Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness

43 Pages Posted: 7 May 2009

See all articles by Holger Zemanek

Holger Zemanek

University of Leipzig - Institute for Economic Policy

Ansgar Hubertus Belke

University of Duisburg-Essen - Department of Economics and Business Administration; IZA Institute of Labor Economics; Centre for European Policy Studies

Gunther Schnabl

University of Leipzig - Institute for Economic Policy

Date Written: May 2009

Abstract

Low international competitiveness of a set of euro area countries, which have become evident by large current account deficits and rising risk premiums on government bonds, is one of the most challenging economic policy issues for Europe. We analyse the role of private restructuring and public structural reforms for the urgently needed readjustment of intra-euro area imbalances. A panel regression reveals a significant impact of private restructuring and public structural reforms on intra-euro area competitiveness. This implies that private restructuring and public reforms are rather than public transfers the best way to preserve long-term economic stability in Europe.

Keywords: structural reforms, international competitiveness, current account imbalances, European Monetary Union, euro area, dynamic panel estimation, interaction term

JEL Classification: E24, F15, F16, F32, F33

Suggested Citation

Zemanek, Holger and Belke, Ansgar Hubertus and Schnabl, Gunther, Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness (May 2009). CESifo Working Paper Series No. 2639, DIW Berlin Discussion Paper No. 895, Available at SSRN: https://ssrn.com/abstract=1400645 or http://dx.doi.org/10.2139/ssrn.1400645

Holger Zemanek

University of Leipzig - Institute for Economic Policy ( email )

Institute for Economic Policy
Grimmaische Strasse 12
Leipzig, 40109
Germany

Ansgar Hubertus Belke

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for European Policy Studies ( email )

1 Place du Congres, 1000
Brussels, 1000
Belgium

Gunther Schnabl (Contact Author)

University of Leipzig - Institute for Economic Policy ( email )

Institute for Economic Policy
Grimmaische Straße 12
Leipzig, 04109
Germany

HOME PAGE: http://www.wifa.uni-leipzig.de/iwp/

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