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The effects of global liquidity on global imbalances

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  • DJIGBENOU-KRE, Marie-Louise
  • Park, Hail

Abstract

This paper examines whether global liquidity has effects on global imbalances. To this end, we estimate Panel-VARX models using data from the G5 (United States, United Kingdom, Euro area, Japan, and Canada) and 20 emerging countries. The empirical results show that the effects on global imbalances of global liquidity, especially the US monetary aggregate, are significant. The foreign exchange reserves of emerging economies are also found to play a significant role related to global imbalances.

Suggested Citation

  • DJIGBENOU-KRE, Marie-Louise & Park, Hail, 2016. "The effects of global liquidity on global imbalances," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 1-12.
    • Handle: RePEc:eee:reveco:v:42:y:2016:i:c:p:1-12
    DOI: 10.1016/j.iref.2015.10.019
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    8. Deininger, Sebastian & Maringer, Dietmar, 2017. "Channels of Sovereign Risk Spillovers and Investment in the Manufacturing Sector," Working papers 2017/07, Faculty of Business and Economics - University of Basel.
    9. Nady Rapelanoro, 2017. "Hoarding international reserves and global liquidity expansion, what are the links and do they matter?," EconomiX Working Papers 2017-13, University of Paris Nanterre, EconomiX.
    10. Serag Masoud & Murad A. Bein & Wagdi Khalifa, 2022. "Examining the relationship between unconventional monetary policy and exchange rate movements: Empirical evidence from United States quantitative easing," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3444-3458, July.
    11. Nady Rapelanoro, 2017. "Hoarding international reserves and global liquidity expansion, what are the links and do they matter?," Working Papers hal-04141660, HAL.

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    More about this item

    Keywords

    Global liquidity; Global imbalances; Panel-VARX; US monetary shock; Spillover effect;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F30 - International Economics - - International Finance - - - General
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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