Current Account ‘Core-Periphery Dualism’ in the EMU

CEPS Working Document, No. 406/March 2015

32 Pages Posted: 28 May 2015

See all articles by Tatiana Cesaroni

Tatiana Cesaroni

Bank of Italy

Roberta de Santis

Italian National Institute of Statistics

Date Written: March 23, 2015


Current account dispersion within EU member states has been increasing since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process that is able to stimulate a long-run rebalancing, as neoclassical theory predicts. To shed light on the issue this paper investigates the determinants of eurozone current account 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 helped 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.

Keywords: EMU, EU, eurozone

Suggested Citation

Cesaroni, Tatiana and de Santis, Roberta, Current Account ‘Core-Periphery Dualism’ in the EMU (March 23, 2015). CEPS Working Document, No. 406/March 2015, Available at SSRN:

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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