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Carlos A. Carrasco
 
''A note on European external imbalances and the euro adoption''
( 2015, Vol. 35 No.4 )
 
 
In this note, we empirically investigate the effects of the euro adoption in the current account in the Eurozone (EA). As a whole, EA countries have presented a current account close to balance. However, at the individual level, EA countries have presented significant and persistent divergences in their current account balances. We implement a differences-in-differences approach using EU-27 and OECD high-income countries as control groups with robust estimation techniques. Our results show evidence of significant effects of the euro adoption in the current account for the EA-12 countries, especially for the GIIPS (Greece, Italy, Ireland, Portugal, and Spain) countries. Moreover, the current account balance in the euro period is positively related to the current account balance of the pre-euro era.
 
 
Keywords: European imbalances, current account, euro adoption, GIIPS
JEL: F4 - Macroeconomic Aspects of International Trade and Finance: General
F5 - International Relations and International Political Economy: General
 
Manuscript Received : Feb 17 2015 Manuscript Accepted : Oct 02 2015

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