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Current account imbalances and real exchange rates in the Euro area

Arghyrou, Michael Georgiou ORCID: https://orcid.org/0000-0001-6222-5086 and Chortareas, Georgios 2008. Current account imbalances and real exchange rates in the Euro area. Review of International Economics 16 (4) , pp. 747-764. 10.1111/j.1467-9396.2008.00773.x

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Abstract

Global current account imbalances have been one of the focal points of interest for policymakers during the last few years. Less attention has been paid, however, to the diverging current account balances of the individual euro area countries. In this paper we consider the dynamics of current account adjustment and the role of real exchange rates in current account determination in the EMU countries. After controlling for the effects of income growth, we find the relationship between real exchange rates and current accounts to be substantial in size and subject to nonlinear effects. We find that real exchange rates can offer further insights, beyond the effects of the income catch-up process, relevant to current account determination in the EMU.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HG Finance
H Social Sciences > HJ Public Finance
J Political Science > JA Political science (General)
J Political Science > JN Political institutions (Europe)
Publisher: Wiley Blackwell
ISSN: 0965-7576
Last Modified: 19 Oct 2022 09:56
URI: https://orca.cardiff.ac.uk/id/eprint/22698

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