Trade deficits are caused by the balances between saving and investment and the effects of those balances on international flows of capital. Generally, there are three primary sources of the trade deficit: a decline in saving/GDP ratio; fluctuations in the business cycles; investment...

The euro area financial system took excessive risks during the global credit boom, which in some countries led to an unsustainable increase in credit, higher asset prices and housing booms. This process helped to fuel large imbalances within the euro area. Banks played a key role in channelling...

This paper considers the increase in current account imbalances in euro area countries since the early 1990s. While the euro area as a whole has remained relatively close to external balance, the current account balances of individual countries have diverged: Spain, Greece and Portugal ran large...