Should we blame the euro for widening of current account deficits in the EMU? In this paper, we employ time-specific fixed effect estimator to study determinants of the current account deficits of the EU countries before and after adoption of the euro. Our aim is to assess to what extent the...

This paper examines whether the effect of fiscal policy on output depends on the size of the financial sector. We find that this relation depends on the level of economic development. In developing countries, fiscal multipliers are higher when the financial sector is larger. The opposite is true...