European Debt Crisis: Theoretical And Empirical Investigation Of External Imbalances As One Of Its Main Causes

The European sovereign debt crisis that emerged at the end of 2009 and de facto followed the subprime mortgage crisis in the United States, has highlighted the diffi culty resulting from signifi cant and deepening external imbalances within the Eurozone since the introduction of the euro. Th e causes of growing imbalances were predominantly the deepening current account defi cits in many peripheral countries and the growing current account surpluses in a vast number of core countries. Th erefore, the main aim of the paper is to analyse the impact of the global economic crisis and European sovereign debt crisis on the development of external imbalances within the Eurozone. Th e methodology is based on the indicator of current account balance, monitoring of development in balance of payments in the selected Eurozone countries and the comparison of the mentioned development before the crisis and aft er its outbreak. Th e fi ndings presented in the paper indicate an improvement of the situation in the area of interest in many Eurozone countries. Facts arising from the analysis also highlight the fact that identifi ed changes of the current account balance aft er the outbreak of the crisis were signifi cant in a large number of analysed countries. Th is indicates a signifi cant infl uence of global imbalances on the progress and spreading of the current debt crisis in the Eurozone and a need to re -evaluate the current policy mix conducted in the Eurozone and to mitigate the impact of the serious design failures of the Euro on the analysed issue.