Tradability of Output and the Current Account: An Empirical Investigation for Europe
By: Stöllinger, Roman.
Material type:
BookSeries: wiiw Working Papers: 134Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 2017Description: 54 S., 15 Tables and 3 Figures, 30cm.Subject(s): current account | tradability index | tradable goods | structural change | value added exportsCountries covered: Europewiiw Research Areas: Macroeconomic Analysis and Policy | International Trade, Competitiveness and FDIClassification: F41 | F32 | F10 | F14 Online resources: Click here to access online Summary: We put forward the hypothesis that increasing specialisation in the production of non-tradable output has a negative impact on the current account balance. This tradability hypothesis is directly derived from a two-sector inter-temporal current account model. To test it empirically we develop a value-added based tradability index which captures the tradability of a country’s output. Applied to a large sample of European countries, our empirical model provides strong evidence for a positive relationship between the current account balance and the tradability index. The main policy implication is that the anxieties about ‘de-industrialisation’ in large parts of Europe seem justified with a view to growing external imbalances.
| Item type | Current library | Call number | Status | Date due | Barcode | |
|---|---|---|---|---|---|---|
| Paper | WIIW Library | 5.700/134 (Browse shelf(Opens below)) | Available | 1000010004122 |
We put forward the hypothesis that increasing specialisation in the production of non-tradable output has a negative impact on the current account balance. This tradability hypothesis is directly derived from a two-sector inter-temporal current account model. To test it empirically we develop a value-added based tradability index which captures the tradability of a country’s output. Applied to a large sample of European countries, our empirical model provides strong evidence for a positive relationship between the current account balance and the tradability index. The main policy implication is that the anxieties about ‘de-industrialisation’ in large parts of Europe seem justified with a view to growing external imbalances.
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