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  • Blaise Gnimassoun (a1) and Valérie Mignon (a2)


This paper investigates the interactions between three key macroeconomic imbalances, namely current-account discrepancies (external imbalances), output gaps (internal imbalances), and exchange-rate misalignments. We estimate a panel VAR model for a sample of 22 industrialized countries over the period 1980–2011. Our findings show that macroeconomic imbalances strongly interact through a causal relationship. If current-account disequilibria threaten the stability of the global economy, their origin can be found in internal imbalances and exchange-rate misalignments: positive output-gap shocks as well as currency overvaluation deepen current-account deficits. In addition, although variations in external imbalances mainly result from exchange-rate misalignments in the euro area, they are mostly explained by output gaps for non-eurozone members.


Corresponding author

Address correspondence to: Valérie Mignon, EconomiX-CNRS, University of Paris Ouest, 200 avenue de la République, 92001 Nanterre Cedex, France; e-mail:


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Macroeconomic Dynamics
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  • EISSN: 1469-8056
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