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Current account imbalances and real exchange rates in the Euro area

Arghyrou, Michael ORCID: https://orcid.org/0000-0001-6222-5086 and Chortareas, Georgios 2006. Current account imbalances and real exchange rates in the Euro area. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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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. After controlling for the effects of income growth, we find the relationship between real exchange rates and the current account to be substantial in size and subject to non- linear effects. Overall, we argue 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: Monograph (Working Paper)
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
Publisher: Cardiff University
Date of First Compliant Deposit: 30 March 2016
Last Modified: 28 Oct 2022 10:17
URI: https://orca.cardiff.ac.uk/id/eprint/77728

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