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Assessing the sustainability of external imbalances in the European Union
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Orientador(es)
Resumo(s)
We assess the sustainability of the current account (CA) balance, net international investment position (NIIP) and net external debt (NED) in a sample of EU countries using two complementary approaches. First, we employ both time-series and panel-data stationarity tests of current account balance-to-GDP ratios as well as cointegration tests of exports and imports of goods and services. Second, we assess the level of trade balance that stabilizes the NIIP and the NED. We find that there is sustainability of the CA balance mainly in a few surplus countries whereas there is more concern about the sustainability of the NIIP or NED in countries with a credit position than in countries with a debit position. Both approaches are consistent with each other given the relationship between flows and stocks, the existence of important structural breaks, and valuation effects via the exchange rate.
Descrição
Palavras-chave
current account exports imports net foreign assets unit roots structural breaks cointegration error-correction cross-sectional dependence European Union
Contexto Educativo
Citação
Afonso, António ... [et al.] (2017). "Assessing the sustainability of external imbalances in the European Union". Instituto Superior de Economia e Gestão – REM Working paper nº 001 - 2017
Editora
ISEG - REM - Research in Economics and Mathematics