This paper proposes a method to identify how labour market institutions and product market regulation interact with economic shocks, and affect unemployment and wage dynamics during periods of external imbalances corrections. This is done using a general equilibrium model of trade, external...

Denmark has been running a current account surplus since 1990. Initially, it was overwhelmingly due to a positive trade balance in both goods and services. Since the early 2000s, income from investment abroad has gained in importance and today contributes as much as the trade in goods. This has...