The Origins of Global Imbalances
AbstractIn this paper we study the endogenous response of unequally developed regions to a drop in investment and trade costs in a general equilibrium model. The response is characterized by a rise in foreign direct investment in the underdeveloped region and increased consumption in the developed one, leading to trade imbalances between the regions. We hereby propose that declining investment and trade costs could have caused this centuryâ€™s global imbalances.
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Bibliographic InfoPaper provided by Czech National Bank, Research Department in its series Working Papers with number 2008/7.
Date of creation: Dec 2008
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Economic development; foreign direct investment; global imbalances; multi-country general-equilibrium model.;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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