Bulletin n. 2/2016
December 2016
INDICE
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Christoph Zwick
    Current Account Adjustment in the Eurozone: Lessons From a Flexible Price Model
    in World Economy , Volume 39, Issue 7 ,  2016 ,  1025-1045
    This paper discusses the desired size of the internal devaluation in the Eurozone for a scenario of current account adjustment induced by shifts in relative demand. Based on Obstfeld and Rogoff, I develop a four-region model of the world economy consisting of the Eurozone-core, Eurozone-periphery, United States and Asia. In contrast to most of the existing literature, this model structure enables studying the impact of global current account adjustment on the rebalancing process in the Eurozone. In addition, the model allows for movements of factors of production between tradable and non-tradable sectors. The results point to the important impact of sectoral reallocation and increases in Asian demand on the size of the internal devaluation as well as on the implied length of the adjustment period.
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