Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/19617 
Year of Publication: 
2005
Series/Report no.: 
Discussion Paper Series 1 No. 2005,32
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
The current accounts of most EU member states in central and eastern Europe have been showing growing deficits in recent years. According to panel estimates the deficits can be attributed primarily to factors characteristic for the stage of development, ie the relative income level and high capital building. The positive impact of a closing income gap, however, is largely compensated by real appreciation. The net effect of government budget deficits is rather small, since they are mostly financed by private saving. Further integration of the financial sector is likely to improve the current accounts. Although the current account positions do not require fundamental policy reversals, there are clear risks of exchange rate adjustments that should be reduced before entering the euro area.
Subjects: 
current account
new EU member countries
catching-up process
JEL: 
F32
F15
Document Type: 
Working Paper

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