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Global Imbalances and External Adjustment After the Crisis

In: Global Liquidity, Spillovers to Emerging Markets and Policy Responses

Author

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  • Philip R. Lane

    (Trinity College Dublin and CEPR)

  • Gian Maria Milesi-Ferretti

    (International Monetary Fund and CEPR)

Abstract

This paper has two objectives. First, it reviews the recent dynamics of global imbalances (both “flow” and “stock” imbalances), with a special focus on the shifting position of Latin America in the global distribution. Second, it examines the cross-country variation in external adjustment over 2008-2012. In particular, it shows how pre-crisis external imbalances have strong predictive power for post-crisis macroeconomic outcomes, allowing for variation across different exchange rate regimes. We emphasize that the bulk of external adjustment has taken the form of “expenditure reduction”, with “expenditure switching” only playing a limited role.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Philip R. Lane & Gian Maria Milesi-Ferretti, 2015. "Global Imbalances and External Adjustment After the Crisis," Central Banking, Analysis, and Economic Policies Book Series, in: Claudio Raddatz & Diego Saravia & Jaume Ventura (ed.),Global Liquidity, Spillovers to Emerging Markets and Policy Responses, edition 1, volume 20, chapter 4, pages 105-142, Central Bank of Chile.
  • Handle: RePEc:chb:bcchsb:v20c04pp105-142
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    References listed on IDEAS

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