Crisis and Global Imbalances: the Fragility of the Current International Monetary System
AbstractGlobal structural factors both monetary and real played a prominent role in the burst of the subprime crisis: 1) the so-called Bretton Woods II international monetary system; 2) the reduction of US real investment return compared with competing countries. We develop a two-country partial equilibrium model to analyze the impact of these factors and macroeconomic policies on the US current account and asset prices. The excess savings of U.S. nonfinancial business sector from 2000-2001 has undermined the stability of the Bretton Woods II system. Accommodative US monetary and fiscal policies have mitigated the imbalances but in the long term structural factors prevailed. Only a recovery of the US real capital profitability can ensure long run coexistence between the present model of global development and current international monetary system.
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Bibliographic InfoArticle provided by SIE - Societa' Italiana degli Economisti (I) in its journal Rivista Italiana degli Economisti.
Volume (Year): 15 (2010)
Issue (Month): 3 (December)
Find related papers by JEL classification:
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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