Current Account 'Core-Periphery Dualism' in the EMU

46 Pages Posted: 31 Mar 2015

See all articles by Tatiana Cesaroni

Tatiana Cesaroni

Bank of Italy

Roberta de Santis

Italian National Institute of Statistics

Multiple version iconThere are 2 versions of this paper

Date Written: March 30, 2015


Current account (CA) dispersion within European Union (EU) member states has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a long run rebalancing as neoclassical theory predicts. To shed light on the issue this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the OECD and EU groups, financial integration contributed to explain CA deterioration in the peripheral countries especially in the post-EMU period. The business cycle seems to have played a growing role over time, whereas the role of competiveness seems to have diminished with respect to the past.

Keywords: current account imbalances, financial integration, EMU, core-periphery countries, panel econometric models

JEL Classification: F36, F43

Suggested Citation

Cesaroni, Tatiana and de Santis, Roberta, Current Account 'Core-Periphery Dualism' in the EMU (March 30, 2015). LEQS Paper No. 90, Available at SSRN: or

Tatiana Cesaroni (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

Roberta De Santis

Italian National Institute of Statistics ( email )

Via Cesare Balbo 16
00184 Rome, 0185

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