摘要：The nearly exclusive explanation for current account imbalances in the euro area blames wage policy for being responsible for trade imbalances and the split between debtor and creditor countries. This essay argues that cross-border capital flows come first and affect aggregate demand and production costs. Trade flows and the real exchange rate adjust. The rationale of this reversed argument is Keynes’ liquidity theory of interest. The policy implications prefer more capital controls against controls of wage formation. Keywords: finance, liquidity preference, trade imbalances, euro area JEL Classification: E12; E43; F36
其他摘要：Extant literature nearly exclusively explains the current account imbalances in the euro area by blaming wage policy. Mainstream economics considers wage policy as responsible for both trade imbalances and the split between debtor and creditor countries. In contrast, this article argues that cross-border capital flows come first, and affect aggregate demand and production costs. Trade flows and the real exchange rate adjust to financial flows. The rationale of this reversed argument is Keynes’ liquidity theory of interest. The policy implications drawn from the argument point in the direction of more capital controls rather than controls on wage formation. JEL Classification: E12; E43; F36
关键词：finance; liquidity preference; trade imbalances; euro area
