The Sustainability of External Imbalances in the European Periphery

Abstract

The issue of external imbalances has become a key concern in the global economy, gaining particular prominence also inside Europe, following the Eurozone crisis. Comparatively, however, evidence for the European periphery is much less developed. In this study we investigate the sustainability of external imbalances in 15 countries from the EU's so-called eastern and super-periphery across a range of sustainability tests. We find that external imbalances are on the whole large and, despite some significant adjustments in the post-crisis period, they continue to follow paths that are possibly unsustainable. Our results show a higher likelihood of confirming sustainability when looking separately at the current account and the net foreign asset position than when looking jointly at the current and capital accounts (and thus at the intertemporal budget constraint -Bohn, 2007). This suggests, albeit tentatively, problems and vulnerabilities that go beyond simple concerns about price competitiveness and the trade performance of the countries under study.

External sustainability in Spanish economy: Bubbles and crises, 1970–2020

“…Vicente Esteve https://orcid.org/0000-0003-3308-4995 ENDNOTES 1 See, for example, Camarero et al (2013), Cuestas (2013), (Bajo-Rubio et al, 2014), Cuestas et al (2015), Afonso et al (2019), Cuestas and Coleman (2021), and Monastiriotis and Tunali (2020) for a review of the empirical evidence. 2 Note that even if Bohn's assertions are originally referred to public finance, they can be easily applied to external imbalances.…”

“…1 1 See, for example, Camarero et al (2013), Cuestas (2013), (Bajo‐Rubio et al, 2014), Cuestas et al (2015), Afonso et al (2019), Cuestas and Coleman (2021), and Monastiriotis and Tunali (2020) for a review of the empirical evidence.…”

Degree of sustainability of current account: evidence from Côte d’Ivoire using a non-linear approach

“…In sum, a multitude of studies on the issue have emerged on data from American and European countries ( Irandoust and Sjöö, 2000 ; Apergis et al., 2000 ; Arize, 2002 ; Llorca, 2017 ; Monastiriotis and Tunali, 2019 ; Afonso et al., 2019 ) but a handful of studies exist only in the African case and even less in sub-Saharan Africa.…”

Sustentabilidade da conta corrente dos EUA e do Brasil e o papel da diferença entre as taxas de retorno de ativos e passivos externos

“…A literatura testa a sustentabilidade da conta corrente por meio de testes de cointegração entre o saldo da balança comercial e a posição externa líquida (Bajo-Rubio et al (2014), Durdu et al (2013), Monastiriotis & Tunali (2020), Schoder et al (2013)). A contribuição do artigo é testar a cointegração entre o saldo da balança comercial e a posição externa líquida para os EUA e o Brasil, mas considerando adicionalmente a possibilidade de diferença entre as taxas de retorno dos ativos e dos passivos externos para os EUA e o Brasil.…”

“…Os dois primeiros analisam o Brasil e obtêm que a conta corrente brasileira não é sustentável Raybaudi et al (2004). reportam evidência de insustentabilidade externa para os EUA, enquantoHolmes (2006) apresenta evidência de sustentabilidade com análise em painel.Baseado no cenário 2 deBohn (2007), a literatura empírica testa a sustentabilidade da conta corrente por meio de testes de cointegração entre o saldo da balança comercial e a posição externa líquida(Bajo-Rubio et al (2014),Durdu et al (2013),Monastiriotis & Tunali (2020),Schoder et al (2013)). 1 A análise é feita com dados em painel de países ou séries temporais de um determinado país.…”