Trade imbalances within the euro area and with respect to the rest of the world

摘要

Many studies have explored the determinants of current account balances in Europe.However, only in a few studies trade balance has been decomposed into intra balance,trade balance vis-à-vis the euro area, and extra balance, trade balance vis-à-visthe rest of the world. This decomposition is necessary for us to understand whysome core euro area countries are acting as financial intermediaries for the peripherycountries. Furthermore, the determinants of intra and extra balances might be differentbecause nominal exchange rate cannot adjust between the EMU countries whiletheir financial markets are highly integrated. Thus, we apply this decomposition andsupplement the previous studies by including a larger set of theoretically plausibleexplanatory variables, which is derived from the current account literature. Our contributionis twofold: We observe that, contrary to Schmitz and von Hagen (2011), theintroduction of common currency has not increased the elasticity of net capital flowsto per capita incomes within the euro area for the member countries. On the otherhand, there is a great heterogeneity among the usual determinants of trade balanceswhether those contribute to intra balances or extra balances. These results increaseour understanding of the imbalances in the euro area.