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Financial Flows, Financial Crises, and Global Imbalances

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  • Obstfeld, Maurice

Abstract

In this lecture I document the proliferation of gross international asset and liability positions and discuss some of the consequences for individual countries’ external adjustment processes and for global financial stability. In light of the rapid growth of gross global financial flows and the serious risks associated with them, one might wonder about the continuing relevance of the net financial flow measured by the current account balance. I argue that global current account imbalances remain an essential target for policy scrutiny, for financial as well as macroeconomic reasons. Nonetheless, it is critically important for policymakers to monitor as well the rapidly evolving structure of global gross assets and liabilities.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8611.

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Date of creation: Oct 2011
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Handle: RePEc:cpr:ceprdp:8611

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Keywords: current account balance; financial instability; global imbalances; international asset positions; international financial flows;

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References

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  1. Philip R. Lane & Gian Maria Milesi-Ferretti, 2006. "The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities,1970–2004," The Institute for International Integration Studies Discussion Paper Series iiisdp126, IIIS.
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  5. Viral V Acharya & Philipp Schnabl, 2010. "Do Global Banks Spread Global Imbalances? Asset-Backed Commercial Paper during the Financial Crisis of 2007–09," IMF Economic Review, Palgrave Macmillan, vol. 58(1), pages 37-73, August.
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  14. Robert E. Lipsey, 2008. "Measuring the Location of Production in a World of Intangible Productive Assets, FDI, and Intrafirm Trade," NBER Working Papers 14121, National Bureau of Economic Research, Inc.
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  16. Viral V. Acharya & Philipp Schnabl, 2010. "Do Global Banks Spread Global Imbalances? The Case of Asset-Backed Commercial Paper During the Financial Crisis of 2007-09," NBER Working Papers 16079, National Bureau of Economic Research, Inc.
  17. Maurico Obstfeld, 2004. "External adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(4), pages 541-568, December.
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