Euro Area: Current Account Imbalances

A real appreciation of the euro against the currencies of its main trading partners appears to have a substantial effect on the Euro area’s net exports in the long run, though the immediate effect is small – argue Alan Ahearne, Brigit Schmitz and Juergen von Hagen in the Studies and Analyses paper no. 345 entitled: Current Account Imbalances in the Euro Area. The authors find that the adjustment to a real appreciation of the euro would not be equally distributed across Euro area countries. In particular, Germany would bear the largest share of the adjustment, while the other Euro area economies would be relatively unaffected.
Download S&A No. 345 or see video clips from the presentation of the paper by Juergen von Hagen (clip 1, clip 2).