Inhalt der Seite
Tradability of Output and the Current Account in Europe
Jubilee Fund of the Austrian Central Bank
One aspect in the debate about current account imbalances in Europe is the consequence of ‘de-industrialisation’ observable in several European. This project highlights the role of tradeability of output as a key determinant of the current account. The relationship between a country’s specialisation in the production of tradeables will be investigated empirically for the full set of European countries over the period 1995-2013. To this end a tradeability index is developed which can be understood as a country’s expected degree of openness given its economic structure. The tradeability hypothesis forwarded predicts that countries producing more tradeable output have a tendency to run current account surpluses. Wage moderation, a structural shock affecting both the tradable and the non-tradeable sector, is used as theoretical underpinning for the tradeability hypothesis. The tradeability hypothesis is tested using both panel regressions and cross-country regression techniques.
July 2015 - December 2016
wiiw team Leader
Keywords: Current account, tradable goods, wage moderation, Europe
Countries covered: EU-28, European Union