Work detail

Current accounts in monetary union: Did Euro cause a shift?

Author: Mgr. Tomáš Olešňaník
Year: 2013 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 83
Awards and prizes:
Link:
Abstract: This thesis examines the implications of Euro on current account balances of countries using it. First, we summarize the main theoretical and empirical findings about determinants of current account deficits and possible implications of monetary union. Second, an empirical analysis of possible effects of single currency is presented. We employ time-specific fixed-effect estimator, corrected for possible endogeneity between fiscal policy stance and current account deficits. Our results do not support the hypothesis of any impact on current account balances as such, however we document positive role of single currency for gross saving and investment rates. We further examined eventual break in the relationship between fiscal and current account balances. Our regression indicates that the role of fiscal balance as determinant of current account transactions increased with introduction of single currency therefore implying less Ricardian behaviour of private sector in Eurozone.

Partners

Deloitte

Sponsors

CRIF
McKinsey
Patria Finance