ALTERNATIVE MEASURES OF MACROECONOMIC IMBALANCES IN THE EU – DESIGN AND VERIFICATION
Years 2008 and 2009 were particularly affected by the outbreak of the global economic recession which in addition to economic instability was also affected by political instability. Economies of most countries in the world felt the impact of the financial crisis, not excluding the EU countries. Since the start of the crisis, there has been a substantial reduction in the EU’s growth potential. In the EU, this was reflected at the macro-level by 4.74% GDP reduction in 2009 (Campos-Soria, Inchausti-Sintes & Eugenio-Martin, 2014). The high levels of external liabilities and private and public debt in many countries in the EU still constitute substantial vulnerabilities for growth, jobs and financial stability. The development of various indicators at micro and macro levels in times of last crisis in various countries was investigated by several authors (Campos-Soria, Inchausti-Sintes, & Eugenio-Martin, 2015; Gugler, Weichselbaumer, & Zulehner, 2015; Zhao, Jiang, & Li, 2014; Tatulescu & Patruti, 2014; Mazurek & Mielcová, 2017; Klepáč & Hampel, 2018).
Jméno a příjmení autora:
Stanislav Kološta, Pavol Kráľ, Filip Flaška
Principal component analysis, macroeconomic imbalances, aggregated index, indicators
DOI (& full text):
As a consequence of financial and economic crisis in the EU the macroeconomic imbalances (MI) have been monitored since 2012. Annual Alarm Mechanism Report (AMR) focused on assessment of MI contains…více
As a consequence of financial and economic crisis in the EU the macroeconomic imbalances (MI) have been monitored since 2012. Annual Alarm Mechanism Report (AMR) focused on assessment of MI contains the interlinkages between the real economy and the financial sector. From AMR data, we can get picture about the evolution of different MI indicators in the EU, but complete picture about the overall situation of individual countries in the field of MI is missing. Therefore, we focused on design and verification of suitable alternative evaluation tool which AMR lacks, and which could be usable for decision making processes within European Commission. The main aim of the article is to propose aggregated and partial indices of MI using constrained PCA which can: i) provide a complex evaluation of each EU country on its global position in headline indicators; ii) make MI indicators more comprehensible for wider use; iii) design simple alternative assessment tool useful for monitoring whether measures taken by the EU and the member states are directed towards improving the macroeconomic balance. The proposed MI indices are verified from a quantitative as well as qualitative point of view. Results of proposed assessment tools showed that: Luxembourg, Germany, Netherland and Sweden can be considered for the most stable EU countries from MI point of view; Post-Communist countries dealt with economic crisis better than some countries from south of the EU; after first crisis years the best improvement in MI index reached Baltic and Visegrad countries together with Luxembourg and Netherland; other EU countries in 2012 did not reach MI index values from pre-crisis period. This study indicates that positive and stable values of current account balance and net international investment position as % of GDP have high weight on macroeconomic stability of EU countries.