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Global Imbalances: A Primer

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Author Info

  • Vincent C.S. Lim
  • Victor Pontines

Abstract

The global imbalances (current-account of BOP) refers to the large current account deficits of developed economies such as the United States and the large surpluses of developing economies such as China and oil rich economies of the Middle East and Russia. In other words, global imbalances are inevitably viewed as the surplus net savings of the developing economies financing the consumption/investment of deficit developed economies. Against the backdrop of the recent Global Financial Crisis (GFC), persistent large global imbalances were seen as one of the triggering factors for causing the crisis. The argument is that before the crisis, the flows of savings from emerging to developed economies eased financial constraints in deficit economies, thereby lowering global interest rates resulting in the credit boom and excessive risk taking. While the causes of the GFC are still open to debate, it may be prudent, nonetheless, to contain global imbalances even though it may have not directly triggered the crisis. In the current situation, there is still this urgent need to address these imbalances to prevent the world economy of being stuck in “midstream”, thus threatening the sustainability of the global recovery.

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Bibliographic Info

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This book is provided by South East Asian Central Banks (SEACEN) Research and Training Centre in its series Staff Papers with number sp86 and published in 2012.

ISBN: 978-983-9478-19-8
Handle: RePEc:sea:spaper:sp86

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References

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  1. Feldstein, Martin, 2008. "Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate," Scholarly Articles 2792081, Harvard University Department of Economics.
  2. Martin Feldstein, 2008. "Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 113-25, Summer.
  3. J. Morgan, Peter, 2011. "The Role of Macroeconomic Policy in Rebalancing Growth," ADBI Working Papers 266, Asian Development Bank Institute.
  4. Pontines, Victor & Siregar, Reza Y., 2010. "Fear of Appreciation in East and Southeast Asia: The Role of the Chinese Renminbi," MPRA Paper 25408, University Library of Munich, Germany.
  5. Adams, Charles & Park, Donghyun, 2009. "Causes and Consequences of Global Imbalances: Perspective from Developing Asia," ADB Economics Working Paper Series 157, Asian Development Bank.
  6. Peter Haiss & Kjell Sümegi, 2008. "The relationship between insurance and economic growth in Europe: a theoretical and empirical analysis," Empirica, Springer, vol. 35(4), pages 405-431, September.
  7. Victor Pontines & Reza Y. Siregar, 2010. "Exchange Rate Asymmetry and Flexible Exchange Rates under Inflation Targeting Regimes: Evidence from Four East and Southeast Asian Countries," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp77, янваÑ.
  8. Carbaugh Robert J & Hedrick David W, 2009. "Will the Dollar be Dethroned as the Main Reserve Currency?," Global Economy Journal, De Gruyter, vol. 9(3), pages 1-16, September.
  9. Adams , Charles & Park, Donghyun, 2009. "Causes and Consequences of Global Imbalances: Perspective from Developing Asia," Asian Development Review, Asian Development Bank, vol. 26(1), pages 19-47.
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Cited by:
  1. Eufrocinio M. Bernabe, Jr, 2012. "Framework for Macro-prudential Policies for Emerging Economies in a Globalized Environment," Research Studies, South East Asian Central Banks (SEACEN) Research and Training Centre, number rp88, June.
  2. Gan-Ochir Doojav & Borkhuu Gotovsuren & Tsenddorj Dorjpurev, 2012. "Financial Contagion and Volatile Capital Flows," Occasional Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number occ56, June.
  3. Hookyu Rhu & C.S. Lim Vincent & L.C. Ong Vivien, 2012. "Rethink Policy Collaboration," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp88, янваÑ.

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