INTERTEMPORAL APPROACH TO THE BALANCE OF PAYMENT OF THE EUROZONE COUNTRIES

Abstract

The intertemporal current account approach is based on an analysis of relation between domestic savings and investments. In this paper we use intertemporal approach to the current account and test relationship between the level of domestic investments and savings in order to see whether they are relevant for explaining the evolution of the current account of single Eurozone members during the period of 2000-2009. We distinguish between The “Old” Eurozone members who entered Eurozone at the beginning of 1991 and The “New” Eurozone members such as Slovenia, Slovakia and Estonia who have become members only recently. Such a comparison enables us to compare development of the balance of payment with respect to intertemporal approach before and after joining the Eurozone.

Keywords

• balance of payment, intertemporal approach, Eurozone

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