{"id":55747,"date":"2023-12-01T18:49:36","date_gmt":"2023-12-01T17:49:36","guid":{"rendered":"https:\/\/www.wifo.ac.at\/publication\/trade-imbalances-within-the-euro-area-two-regions-two-demand-regimes\/"},"modified":"2025-10-22T22:21:05","modified_gmt":"2025-10-22T20:21:05","slug":"trade-imbalances-within-the-euro-area-two-regions-two-demand-regimes","status":"publish","type":"publication","link":"https:\/\/www.wifo.ac.at\/en\/publication\/55747\/","title":{"rendered":"Trade imbalances within the Euro Area: two regions, two demand regimes"},"content":{"rendered":"","protected":false},"featured_media":0,"template":"","class_list":["post-55747","publication","type-publication","status-publish","hentry"],"acf":{"subtitle":"","text":"Greater trade integration, convergence in economic performance and a high level of employment among member states: this was why the euro area was created. In this respect, the paper analyses the sources of trade imbalances within the euro area, focusing on the direct trade relationship \u2013 intra-euro-area trade \u2013 between surplus and deficit countries. The econometric evidence based on a VAR\/SVAR methodology suggests that asymmetric wage shocks determine asymmetric gains from intra-euro-area trade, resulting from opposing growth strategies. In addition, the empirical evidence shows that the euro area is divided into two economic regions representing different demand regimes: a northern region, which is profit-led and a southern region, which is wage-led. The paper suggests that wage coordination is an essential macroeconomic tool but is insufficient to achieve trade and economic integration given the current state of divergence. Thus, a trade-based transfer mechanism is proposed to restore convergence in the euro area.","onlinedate":"2021-02-01 01:00:00","lang":"English","publication_series":"","publication_date":"20210201","publication_date_year":"","publication_date_full":false,"publication_num_pages":"","keywords":"[]","jelcodes":"[]","related_publications":"[]","pdf":null,"zip":null,"link":"http:\/\/www.springer.com\/10663","monthly_report":false,"monthly_report_main":false,"monthly_report_volume":"48","monthly_report_pages":"181-221","monthly_report_pages_sort":"181","issue":"1","journal":"Empirica","publisher":"","invisible":false,"external":true,"embargo_date":null,"types":[83083],"research_groups":[3500],"collaboration":"","persons":[14661],"persons_data":"[{\"personId\":14661,\"personName\":\"Giovanni Covi\",\"organisationNames\":[]}]","clients":[],"subclients":[],"partners":[],"topics":[],"host_publication_title":"","host_publication_subtitle":"","place_of_publication":"","host_publication_editors":"[]","type_description":"","output_media":"","chapter":"","article_number":"","scientific_assistance":"[]","scientific_review":"[]","version":"","release_date":null,"expiration_date":null,"surveyor":"","research_assistance":"","edv":"","additional_info_de":"","additional_info_en":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - 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