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The Intertemporal Equilibrium Modeling of Intra-EMU and Global Trade Imbalances

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  • Karl Farmer

    (University of Graz)

Abstract

The intertemporal equilibrium approach to current accounts analyzed the impacts of respective intra-European Monetary Union (intra-EMU) and Asian-U.S. financial integration between 1999 and 2007 on the intra-EMU current account and global trade imbalances. Moreover, Farmer and Ban (2014) find in a three-country, two-region overlapping generations model that financial integration between both the EMU core and periphery and between Asia and the U.S. induce trade surpluses in the EMU core and Asia, while in the EMU periphery and in the U.S., trade balances become negative when the global economy is dynamically inefficient. In this paper, we first show that in a numerically specified Farmer-Ban model, steady-state trade balance to gross domestic product ratios are too low compared to the empirically observed counterparts. We suggest avenues to ameliorate this problem.

Suggested Citation

  • Karl Farmer, 2016. "The Intertemporal Equilibrium Modeling of Intra-EMU and Global Trade Imbalances," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(4), pages 377-395, November.
    • Handle: RePEc:kap:iaecre:v:22:y:2016:i:4:d:10.1007_s11294-016-9597-5
    DOI: 10.1007/s11294-016-9597-5
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    Cited by:

    1. Karl Farmer & Irina Ban, 2017. "Modeling Financial Integration, Intra-EMU and Asian-US External Imbalances," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(3), pages 261-281, August.

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