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Global and European Imbalances:A critical review

Author

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  • Carlos A. Carrasco

    (University of the Basque Country (EHU/UPV))

  • Felipe Serrano

    (University of the Basque Country (EHU/UPV))

Abstract

In this paper, we survey and analyse the economic literature on global and European imbalances and their connection with the global financial crisis. In the years preceding the crisis, there was increased attention to the existence of large current account imbalances among large economies worldwide. Research and policy papers divided into two positions regarding these imbalances. Some authors viewed global imbalances as part of a new equilibrium in the international financial system. Others urged policy intervention to reduce these imbalances. The Great Recession revived the debate over global imbalances and their influence on the gestation of the crisis. However, more recent work has clarified the relationship between the crisis and global imbalances, emphasising the roots of the crisis in financial liberalisation and the fragility of the international financial system. From this perspective, we highlight the need for deeper analysis of gross capital flows and the need to monitor credit levels as measures to prevent future financial crises.

Suggested Citation

  • Carlos A. Carrasco & Felipe Serrano, 2014. "Global and European Imbalances:A critical review," Working papers wpaper42, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    • Handle: RePEc:fes:wpaper:wpaper42
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    Cited by:

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    2. Picciolo, Francesco & Papandreou, Andreas & Hubacek, Klaus & Ruzzenenti, Franco, 2017. "How crude oil prices shape the global division of labor," Applied Energy, Elsevier, vol. 189(C), pages 753-761.
    3. Carlos A. Carrasco & Patricia Peinado, 2015. "On the Origin of European Imbalances in the Context of European Integration," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(2), pages 177-191, June.
    4. Eckhard Hein, 2015. "Causes and Consequences of the Financial Crisis and the Implications for a More Resilient Financial and Economic System: Synthesis of FESSUD Work Package 3," Working papers wpaper128, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    5. Carlos A. Carrasco, 2015. "A note on European external imbalances and the euro adoption," Economics Bulletin, AccessEcon, vol. 35(4), pages 2104-2109.
    6. Hein, Eckhard, 2016. "Causes and consequences of the financial crisis and the implications for a more resilient financial and economic system," IPE Working Papers 61/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    More about this item

    Keywords

    savings glut; current account; global imbalances; financial fragility;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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