Title Progress towards external adjustment in the Euro Area periphery and the Baltics / Joong Shik Kang and Jay C. Shambaugh

Published [Washington, D.C.] : International Monetary Fund, ©2014

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Description 1 online resource (31 pages) : color illustrations Series IMF working paper, 1018-5941 ; WP/14/131 IMF working paper ; WP/14/.131. Contents Cover -- Contents -- I. Introduction -- II. Overall Adjustment -- III. Timing and Extent of Wage Adjustment -- IV. Sectoral Adjustment -- V. External Performance -- VI. Where Are We Now? -- VII. Conclusion -- References -- Appendixes -- I. Sectoral Classification -- II. Cyclically-Adjusted Current Account Balances Summary "The euro area periphery countries and the Baltic countries, which had large current account deficits in the run-up to the crisis, needed adjustment of relative prices to achieve both internal and external balances. Thus far, tangible progress has been made through lower wages and/or higher productivity relative to trading partners ("internal devaluation"), which contributed to narrowing current account deficits and shifting output towards the tradables sector. While some early adjusters cut wages more rapidly followed by productivity improvement, others have only slowly improved productivity largely through labor shedding. This adjustment for most countries has come along with a substantial recession as the unit labor cost improvement has largely come from falling employment and much of the current account improvement from import compression. Going forward, these countries still need to generate growing tradables sector employment and to continue adjustment to prevent imbalances from returning as output gaps close"--Abstract Notes "Research Department"--Page 2 of pdf "July 2014." Bibliography Includes bibliographical references (pages 27-28) Notes Online resource; title from pdf title page (IMF.org Web site, viewed July 23, 2014) Subject Balance of payments -- European Union countries Balance of payments -- Baltic States Competition -- European Union countries Competition -- Baltic States Labor costs -- European Union countries Labor costs -- Baltic States Balance of payments Competition Labor costs Baltic States European Union countries Form Electronic book Author Shambaugh, Jay C., author. International Monetary Fund. Research Department, issuing body. ISBN 9781498375849 1498375847 1498364713 9781498364713

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