Adjustment in Euro Area Deficit Countries: Progress, Challenges, and Policies

Business & Finance, Economics, Money & Monetary Policy, Macroeconomics
Cover of the book Adjustment in Euro Area Deficit Countries: Progress, Challenges, and Policies by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks, INTERNATIONAL MONETARY FUND
View on Amazon View on AbeBooks View on Kobo View on B.Depository View on eBay View on Walmart
Author: Thierry Mr. Tressel, Shengzu Mr. Wang, Joong Shik Kang, Jay C. Shambaugh, Jörg Mr. Decressin, Petya Koeva Brooks ISBN: 9781498362900
Publisher: INTERNATIONAL MONETARY FUND Publication: July 14, 2014
Imprint: INTERNATIONAL MONETARY FUND Language: English
Author: Thierry Mr. Tressel, Shengzu Mr. Wang, Joong Shik Kang, Jay C. Shambaugh, Jörg Mr. Decressin, Petya Koeva Brooks
ISBN: 9781498362900
Publisher: INTERNATIONAL MONETARY FUND
Publication: July 14, 2014
Imprint: INTERNATIONAL MONETARY FUND
Language: English

Imbalances within the euro area have been a defining feature of the crisis. This paper provides a critical analysis of the ongoing rebalancing of euro area “deficit economies” (Greece, Ireland, Portugal, and Spain) that accumulated large current account deficits and external liability positions in the run-up to the crisis. It shows that relative price adjustments have been proceeding gradually. Real effective exchange rates have depreciated by 10-25 percent, driven largely by reductions in unit labor costs due to labor shedding. While exports have typically rebounded, subdued demand accounts for much of the reduction in current account deficits. Hence, the current account balance of the euro area as a whole has shifted into surplus. Internal rebalancing has come with subdued activity-notably very high unemployment in the deficit economies-and made continued adjustment more difficult. To advance rebalancing further, the paper emphasizes the need for: (1) macroeconomic policies that support demand and bring inflation in line with the ECB’s medium-term price stability objective; (2) continued EMU reforms (banking union) to ensure proper financial intermediation; and (3) structural reforms in product and labor markets to improve productivity and support the reallocation of resources to tradable sectors.

View on Amazon View on AbeBooks View on Kobo View on B.Depository View on eBay View on Walmart

Imbalances within the euro area have been a defining feature of the crisis. This paper provides a critical analysis of the ongoing rebalancing of euro area “deficit economies” (Greece, Ireland, Portugal, and Spain) that accumulated large current account deficits and external liability positions in the run-up to the crisis. It shows that relative price adjustments have been proceeding gradually. Real effective exchange rates have depreciated by 10-25 percent, driven largely by reductions in unit labor costs due to labor shedding. While exports have typically rebounded, subdued demand accounts for much of the reduction in current account deficits. Hence, the current account balance of the euro area as a whole has shifted into surplus. Internal rebalancing has come with subdued activity-notably very high unemployment in the deficit economies-and made continued adjustment more difficult. To advance rebalancing further, the paper emphasizes the need for: (1) macroeconomic policies that support demand and bring inflation in line with the ECB’s medium-term price stability objective; (2) continued EMU reforms (banking union) to ensure proper financial intermediation; and (3) structural reforms in product and labor markets to improve productivity and support the reallocation of resources to tradable sectors.

More books from INTERNATIONAL MONETARY FUND

Cover of the book Revenue Administration: Administering Revenues from Natural Resources by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Financial Sector Regulation and Supervision: The Case of Small Pacific Island Countries by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Integrating Europe's Financial Markets by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Finance & Development, June 1996D by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book U.S. Fiscal Policies and Priorities for Long-Run Sustainability by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Manual on Fiscal Transparency (2007) by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Multilateral Aspects of Managing the Capital Account (EPub) by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Finance & Development, September 1987 by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book The Effectiveness of Capital Controls and Prudential Policies in Managing Large Inflows by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Global Financial Stability Report, April 2004 by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Monetary Policy and Bank Risk-Taking by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Finance & Development, June 1974 by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Finance & Development, December 1972 by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Finance & Development, June 2003 by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
Cover of the book Recent Economic Developments, Prospects, and Progress in Institution Building in the West Bank and Gaza Strip by Thierry  Mr. Tressel, Shengzu  Mr. Wang, Joong Shik  Kang, Jay C. Shambaugh, Jörg  Mr. Decressin, Petya  Koeva Brooks
We use our own "cookies" and third party cookies to improve services and to see statistical information. By using this website, you agree to our Privacy Policy