The Two Crises of International Economics
Abstract
In this essay, we argue that key assumptions in international macroeconomic theory, though useful for understanding the economic relationships among developed countries, have been pushed beyond their competence to include relationships between developed economies and emerging markets. The Achilles heel of this extended development model is the assumption that threats to deprive the debtor countries of gains from trade provide incentives for poor countries to repay more than trivial amounts of international debt. Replacing this assumption with the idea that collateral is required to support gross international capital flows suggests that the pattern of current account balances seen in recent years is a sustainable equilibrium.Download Info
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13197.Length:
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:nbr:nberwo:13197
Note: IFM
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Related research
Keywords:Find related papers by JEL classification:
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-07 (All new papers)
- NEP-CBA-2007-07-07 (Central Banking)
- NEP-INT-2007-07-07 (International Trade)
References
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- Ricardo J. Caballero, 2006. "On the Macroeconomics of Asset Shortages," NBER Working Papers 12753, National Bureau of Economic Research, Inc.
- Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2005. "Savings Gluts and Interest Rates: The Missing Link to Europe," NBER Working Papers 11520, National Bureau of Economic Research, Inc.
Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Eduardo Borensztein & Ugo Panizza, 2009.
"The Costs of Sovereign Default,"
IMF Staff Papers,
Palgrave Macmillan, vol. 56(4), pages 683-741, November.
- Eduardo Borensztein & Ugo Panizza, 2008. "The Costs of Sovereign Default," IMF Working Papers 08/238, International Monetary Fund.
- Herrmann, Sabine & Winkler, Adalbert, 2008.
"Financial markets and the current account: emerging Europe versus emerging Asia,"
Discussion Paper Series 1: Economic Studies
2008,05, Deutsche Bundesbank, Research Centre.
- Sabine Herrmann & Adalbert Winkler, 2009. "Financial markets and the current account: emerging Europe versus emerging Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(3), pages 531-550, October.
- Sabine Herrmann & Adalbert Winkler, 2008.
"Real convergence, financial markets, and the current account – Emerging Europe versus emerging Asia,"
Occasional Paper Series
88, European Central Bank.
- Herrmann, Sabine & Winkler, Adalbert, 2009. "Real convergence, financial markets, and the current account - Emerging Europe versus emerging Asia," The North American Journal of Economics and Finance, Elsevier, vol. 20(2), pages 100-123, August.
- Sabine Herrmann & Adalbert Winkler, 2009. "Real convergence, financial markets, and the current account - Emerging Europe versus emerging Asia," European Economy - Economic Papers 362, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2008.
"Will Subprime be a Twin Crisis for the United States?,"
NBER Working Papers
13978, National Bureau of Economic Research, Inc.
- Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2009. "Will Sub-Prime be a Twin Crisis for the United States?," Review of International Economics, Wiley Blackwell, vol. 17(4), pages 655-666, 09.
- Jean-François Goux, 2008. "Ruptures épaisses et stationnarité en tendance : le cas du taux de change euro-dollar," Post-Print halshs-00333576, HAL.
- Eichengreen, Barry & Gullapalli, Rachita & Panizza, Ugo, 2011.
"Capital account liberalization, financial development and industry growth: A synthetic view,"
Journal of International Money and Finance,
Elsevier, vol. 30(6), pages 1090-1106, October.
- Eichengreen, Barry & Gullapalli, Rachita & Panizza, Ugo, 2009. "Capital account liberalization, financial development and industry growth: a synthetic view," POLIS Working Papers 128, Institute of Public Policy and Public Choice - POLIS.
- Yilmaz Akyüz, 2009. "Mananging Financial Instability: Why Prudence is not Enough?," Working Papers 86, United Nations, Department of Economics and Social Affairs.
- Kim, C., 2011. "Global balance and financial stability: twin objectives toward a resilient global economic system," Financial Stability Review, Banque de France, issue 15, pages 61-72, February.
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This item is featured on the following reading lists or Wikipedia pages:- International monetary systems in Wikipedia (English)
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