Eurozone Imbalances: Expenditure Switching and Expenditure Volumes

Enno Schröder
Written By SCEPA

WORKING PAPER

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This paper introduces a decomposition of the trade ratio.

The dynamics of the trade ratio are composed of contributions from expenditure switching, from the terms of trade, and from relative expenditure (i.e. the ratio of foreign to domestic expenditure). Country-specific, dynamically tradeweighted indicators of foreign expenditure are constructed for use in the application of the decomposition to 11 euro area countries in 1990-2013.

SCEPA
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