The European north-south divide has been an issue of a long-standing debate. We employ a Global VAR model for 28 developed and developing countries to examine the interaction between the global trade imbalances and their impact within the euro-area framework. The aim is to assess the propagation...

The accumulated, persistent trade and economic imbalances between the south euro area (SEA) and the north euro area (NEA) countries brought about severe strains for the euro following the global financial crisis. This paper assesses alternative scenarios suggested to restore the trade imbalances...

We investigate the effects of "contractionary" monetary shocks by imposing sign restrictions on the impulse responses of macroeconomic variables up to six months while allowing industrial production and exchange rate to be completely determined by the data. We show that i) the effect of an...