We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Current Account Adjustment in the Eurozone: Lessons From a Flexible Price Model.
- Authors
Zwick, Christoph
- Abstract
This paper discusses the desired size of the internal devaluation in the Eurozone for a scenario of current account adjustment induced by shifts in relative demand. Based on Obstfeld and Rogoff, I develop a four-region model of the world economy consisting of the Eurozone-core, Eurozone-periphery, United States and Asia. In contrast to most of the existing literature, this model structure enables studying the impact of global current account adjustment on the rebalancing process in the Eurozone. In addition, the model allows for movements of factors of production between tradable and non-tradable sectors. The results point to the important impact of sectoral reallocation and increases in Asian demand on the size of the internal devaluation as well as on the implied length of the adjustment period.
- Subjects
DEVALUATION of currency; EUROZONE; BALANCE of payments; CORE &; periphery (Economic theory); CURRENCY revaluation; FOREIGN exchange accounting
- Publication
World Economy, 2016, Vol 39, Issue 7, p1025
- ISSN
0378-5920
- Publication type
Article
- DOI
10.1111/twec.12309