A note on European external imbalances and the euro adoption

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Abstract

In this note, we empirically investigate the effects of the euro adoption in the current account in the Eurozone (EA). As a whole, EA countries have presented a current account close to balance. However, at the individual level, EA countries have presented significant and persistent divergences in their current account balances. We implement a differences-in-differences approach using EU-27 and OECD high-income countries as control groups with robust estimation techniques. Our results show evidence of significant effects of the euro adoption in the current account for the EA-12 countries, especially for the GIIPS (Greece, Italy, Ireland, Portugal, and Spain) countries. Moreover, the current account balance in the euro period is positively related to the current account balance of the pre-euro era.

Original languageEnglish
Pages (from-to)2104-2109
Number of pages6
JournalEconomics Bulletin
Volume35
Issue number4
Publication statusPublished - 2015

Bibliographical note

Publisher Copyright:
© 2015. All Rights Reserved.

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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