Eurozone Housekeeping – Stock and Flow Perspective

Authors

JONÁŠ Jan KOMÍNEK Ondřej

Type Article in Proceedings
Conference Proceedings of the 3rd International Conferenceon European Integration 2016
MU Faculty or unit

Faculty of Economics and Administration

Citation
Field Economy
Keywords Stock Flow Consistent Models; Sectoral Balances; State Deficit; Trade Deficit
Description The questions of European integration have been influenced by various aspects of debt and deficit in recent years. Economist and policy makers discuss mostly the so called twin deficits consisting of government budged and imbalances in balance of payment. In this paper we take a perspective of national accounts to investigate the question of macroeconomic imbalances connected with the European sovereign debt crisis. More specifically we utilize the methodology of sectoral balances lying behind Flow of Funds statistics and Post Keynesian macroeconomic analysis. We use a simplified, highly consolidated accounting model of an economy consisting of three sectors i.e. domestic private sector of households and firms, government sector and foreigner sector. Since every debtor has to have a creditor by definition, the interconnections among sectoral financial balances get interesting views and implications for Eurozone’s housekeeping, like deficits at periphery and surpluses at core countries or limitations on private sector balances by various fiscal constraints.
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