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Capital Flows in the Euro Area

Philip R. Lane

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We investigate the behaviour of gross capital flows and net capital flows for euro area member countries. We highlight the extraordinary boom-bust cycles in both gross flows and net flows since 2003. We also show that the reversal in net capital flows during the crisis has been very costly in terms of macroeconomic and financial outcomes for the high-deficit countries. Finally, we describe the reforms that can improve macro-financial stability across the euro area.

(European Economy. Economic Papers. 497. April 2013. Brussels. PDF. 54pp. Tab. Bibliogr. Free.)

KC-AI-13-497-EN-N (online)
ISBN 978-92-79-28579-0 (online)
doi:10.2765/43795 (online)

JEL classification: E42, F32, F41

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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