Global Rebalancing: Implications for Low-Income Countries
AbstractWhile global rebalancing will mainly involve structural realignment among major advanced and emerging market economies, it could have significant impact on low-income countries (LICs). Simulations using a global general equilibrium model show that a more balanced global economy would tend to improve the current account balance in LICs with limited impact on domestic output. However, there could be adverse terms of trade effects on some LICs as the prices of manufactured goods rise. On the other hand, such prices increases could provide an impetus to export diversification in many LICs, raising growth in the long run. The output and terms of trade effects would be significantly amplified if structural adjustment is impeded by factor immobility and other rigidities.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/239.
Date of creation: 01 Oct 2011
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- NEP-ALL-2011-11-28 (All new papers)
- NEP-CMP-2011-11-28 (Computational Economics)
- NEP-DEV-2011-11-28 (Development)
- NEP-OPM-2011-11-28 (Open Economy Macroeconomic)
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