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The objective of the workshop is to improve our understanding of the intertwining between public finances and external imbalances in the EU
The economics literature suggests that with globalisation and the
intensification of international trade and capital flows countries tend to
experience growing divergence in their current account performances, thanks to
increased capital flows between creditor and debtor countries. Such increased
trade and financial integration might thus lead to the building up of large
external imbalances heightening the costs associated with the risk of sudden
stops in external debt-financing capital flows provoked by the occurrence of
large macroeconomic shocks such as the current financial crisis. Existing
evidence also shows that countries facing such sudden stops often relied on
exchange rate adjustment to restore competitiveness and promote export-led
recoveries following the advent of major economic downturns. Such mechanisms,
however, no longer exist for euro area countries, providing further prominence
to fiscal policy as macroeconomic adjustment device for preventing the building
up of external imbalances and smoothing the adverse effects of post-crisis
adjustment process on prices and economic growth. In particular, dynamic
internal demand favoured by the credit expansion and property prices
appreciation has led some euro area countries (such as Ireland or Spain) to
experience growing current account deficits, appreciating real exchange rates
and significant increase in net foreign liabilities prior the outbreak of the
current financial crisis. Other countries (such as Germany or the Netherlands)
have, on the contrary, benefited from dynamic export-led growth but appeared
also exposed to the sudden halt in world trade with disruptive consequence for
public finances and economic growth. Outside the euro area, many recently
acceded Member States experienced significant real exchange rate appreciation
and fast deteriorating current account balances increasing their exposure to
the financial crisis and the sharp cyclical downturn that followed.
The sessions of the workshop will cover the following topics:
Date and venue
27 November 2009, Centre Borschette, CCAB 0D Rue Froissart 36,
Brussels
Registration before 6 November 2009
Please complete the registration form(102 kB) (Rich text format) and
return it by email before Friday 6 November at the latest.
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Contact
For any queries related to the programme or the organisation of the workshop,
please contact the organising team
by email or fax (+32-2-299 35 05)
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