IMF: global imbalances matter to Europe
According to an IMF working paper published in June, although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses.
The paper is authored by Philip Lane and Gian Maria Milesi-Ferretti, who "assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels."
Their paper also considers the exposure across individual European economies to external adjustment shocks.
Read the paper here.
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