Capital Markets and External Current Accounts: What to Expect From the Euro
IMF Working Papers, August 1, 2000
Source details
- Canonical URL
- Capital Markets and External Current Accounts: What to Expect From the Euro
Other formats
Bibliographic details
- Authors: Jörg Decressin, Piti Disyatat
- Published: August 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451857221.001
Summary findings
- The paper compares the degree of capital market integration across euro-area countries with that across regions in Italy and provinces in Canada.
- Analyses of saving-investment correlations, and a model of capital flows developed and fitted to the data, reveal no compelling differences between the integration across countries before monetary union and that across the regions or provinces.
- The evidence does not suggest that EMU will prompt a major reallocation of net capital flows within the euro area that would entail sizable shifts in countries’ equilibrium current accounts.
Methodology and analysis
- Empirical analysis of saving-investment correlations across:
- euro-area countries (pre-monetary union)
- regions in Italy
- provinces in Canada
- Development and calibration/estimation of a model of capital flows fitted to the data to assess potential reallocations induced by monetary union.
Conclusions and policy implications
- No compelling empirical or model-based evidence that monetary union (EMU) will cause major reallocation of net capital flows among euro-area countries.
- Accordingly, sizable shifts in countries’ equilibrium current accounts within the euro area are not indicated by the study’s findings.
Subjects and keywords
- Subjects: Balance of payments, Capital market integration, Capital markets, Current account, Economic integration, Financial markets, Financial services, Production, Productivity, Real interest rates
- Keywords: capital market, Capital market integration, Capital markets, capital mobility, Current account, current account response, EMU, Euro area, Global, investment, investment response, Productivity, productivity shock, Real interest rates, regions, saving, saving-investment correlation, WP
Content summarized from the IMF Working Paper landing page: "Capital Markets and External Current Accounts: What to Expect From the Euro", Jörg Decressin and Piti Disyatat, August 1, 2000.
Content in this bundle
- Capital Markets and External Current Accounts: What to Expect from the Euro - WP/00/154