Europe and Global Imbalances

54 Pages Posted: 24 Aug 2007

See all articles by Philip R. Lane

Philip R. Lane

Trinity College (Dublin) - Department of Economics; Centre for Economic Policy Research (CEPR); Central Bank of Ireland

Gian Maria Milesi-Ferretti

International Monetary Fund (IMF); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

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Abstract

Although Europe in the aggregate is not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.

Suggested Citation

Lane, Philip R. and Milesi-Ferretti, Gian Maria, Europe and Global Imbalances. Economic Policy, Vol. 22, No. 51, pp. 519-573, July 2007. Available at SSRN: https://ssrn.com/abstract=1007837 or http://dx.doi.org/10.1111/j.1468-0327.2007.00184.x

Philip R. Lane (Contact Author)

Trinity College (Dublin) - Department of Economics ( email )

Trinity College
Dublin 2
Ireland
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Centre for Economic Policy Research (CEPR)

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Central Bank of Ireland ( email )

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Ireland

Gian Maria Milesi-Ferretti

International Monetary Fund (IMF) ( email )

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202-589-7441 (Fax)

National Bureau of Economic Research (NBER)

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United States

Centre for Economic Policy Research (CEPR)

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United Kingdom

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