Contributions

  • Giavazzi, Francesco - Contributor
  • Massachusetts Institute of Technology. Dept. of Economics - Contributor

Publication

2002 - Massachusetts Institute of Technology, Dept. of Economics, Cambridge, MA, Massachusetts

Language

English

Word Count

11,250 words, Guess

Page Count

45 pages

Identifiers

Alternate Titles

  • Current account deficits

Description

Both Portugal and Greece have been running large current account deficits, and these are expected to continue in the future. Yet, financial markets do not appear to be worried. Starting from this observation, we document that Portugal and Greece are in fact representative of a broader evolution: Increasing goods and financial market integration is leading to an increasing decoupling of saving and investment within the European Union, and even more so within the Euro area. In particular, it is allowing poorer countries to invest more, save less, and run larger current account deficits. The converse holds for the richer countries. Keywords: Current Account, Europe, Euro, Feldstein Horioka Puzzle, Saving, Investment, Capital Market Integration, Product Market Integration. JEL Classification: F32, F36, F41, F43.

Subjects

Series Statement

  • Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 03-05
  • Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 03-05.

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