Template-type: ReDIF-Paper 1.0  
Author-Name: Alberto Fuertes Mendoza
Author-Workplace-Name: Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.
Title: External adjustment with a common currency: The case of the Euro Area
Abstract: This paper analyzes the behaviour of the external adjustment path for the fourmain economies in the euro area. I find a structural 
	break in the behaviour of thenet external position at the time of the introduction of the euro for France, Italyand Spain, pointing out 
	that the inception of the common currency changed theirexternal adjustment process. Germany does not show this structural break, beingits 
	external position more affected by other events such as the country reunificationin 1989. I also find that France and Italy will adjust 
	the net external position mainlythrough the valuation component, while Germany and Spain will restore their externalbalance mostly 
	through the trade component. The common currency area exacerbatedGermany’s net creditor position as the evolution of the euro has 
	reacted to the externaladjustment needs of debtor countries such as Italy and Spain.
Keywords: External Adjustment; Exchange Rate Regime; Structural Breaks; Valuation Adjustment.
Creation-Date: 2020
Length: 34 pages
Number: 2002
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/wpaper20-02.txt
File-URL: https://eprints.ucm.es/id/eprint/59207/1/WP02-20.pdf
File-Format: Application/pdf
File-Function: Full text
Handle: RePEc:ucm:wpaper:2002