Sustainability of External Imbalances

1. Front Matter

   Pages I-XI

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2. Introduction

   • Angélique Herzberg

   Pages 1-10

3. Digression on balance of payments accounting identities

   • Angélique Herzberg

   Pages 11-16

4. Intertemporal budget constraint as a sustainability criterion

   • Angélique Herzberg

   Pages 17-48

5. Empirical implications of the intertemporal budget constraint

   • Angélique Herzberg

   Pages 49-80

6. Empirical studies on the validity of the intertemporal budget constraint

   • Angélique Herzberg

   Pages 81-171

7. Dynamic benchmarks of external sustainability

   • Angélique Herzberg

   Pages 173-234

8. Indicators of external sustainability

   • Angélique Herzberg

   Pages 235-289

9. Concluding discussion

   • Angélique Herzberg

   Pages 291-295

10. Back Matter

    Pages 297-329

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Since the mid-1990s, sustainability of large and persistent current account positions have been attracting much attention from policy makers and economists alike. Alongside global imbalances, sustainability of imbalances within the euro area, which started widening shortly after the introduction of the euro, raised much concern. While there exists a large body of theoretical and empirical literature on sustainability of external imbalances, a systematic survey has been lacking so far. Angélique Herzberg fills this gap by examining a broad range of established sustainability measures concerning their applicability to the various global and intra-euro imbalances of the recent past. Furthermore, the author examines the existence of feedback effects from an economy´s net international investment position to its trade balance.

• Current account balance
• External sustainability
• Global imbalances
• Intertemporal budget constraint
• Transversality condition

• Lehrstuhl für Volkswirtschaftslehre, Heinrich-Heine-Universität, Düsseldorf, Germany

  Angélique Herzberg

Angélique Herzberg obtained a PhD in Economics in 2013 from Heinrich-Heine-University, Düsseldorf. Her areas of specialization are international macroeconomics and finance.

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