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External and macroeconomic adjustment in Spain and Germany

Author

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  • Elena Angelini
  • Michele Ca' Zorzi

Abstract

The balanced current account in the euro area has disguised sizeable imbalances at the country level. The policy debate has concentrated on whether demand in surplus countries should be strengthened or wage growth in deficit countries should be dampened. Using a multi-country model, we evaluate both alternatives. Improvements in wage competitiveness preserve external stability, but have only mildly expansionary effects. JEL Classification: C5, F32, F41, O52

Suggested Citation

  • Elena Angelini & Michele Ca' Zorzi, 2014. "External and macroeconomic adjustment in Spain and Germany," Research Bulletin, European Central Bank, vol. 20, pages 9-12.
    • Handle: RePEc:ecb:ecbrbu:2014:0020:3
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    References listed on IDEAS

    as
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    6. Olivier Blanchard & Francesco Giavazzi, 2002. "Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 147-210.
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    More about this item

    Keywords

    net lending; euro area countries; current account; modeling;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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