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An asymmetry matrix in global current accounts

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Author Info

  • Schnabl, Gunther
  • Freitag, Stephan

Abstract

The paper discusses global imbalances under the aspect of an asymmetric world monetary system. It identifies the US and euro area (Germany) as center countries with rising current account deficits (US) and surpluses (Germany) which are matched by respective current account surpluses of coun-tries stabilizing their exchange rates against the dollar (dollar periphery) and rising current account deficits of the countries stabilizing their exchange rate against the euro (euro periphery). The paper finds that the changes of the world current account positions are driven by the macroeconomic pol-icy decisions in the centers. In particular, expansionary monetary and fiscal policies in the US are argued to have triggered rising current account surpluses of the dollar periphery countries, as mone-tary and fiscal sterilization policies in the periphery contribute to rising saving surpluses. --

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Bibliographic Info

Paper provided by University of Leipzig, Faculty of Economics and Management Science in its series Working Papers with number 76.

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Date of creation: 2009
Date of revision:
Handle: RePEc:zbw:leiwps:76

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Related research

Keywords: Global Imbalances; Asymmetric World Monetary System; Twin Deficit; Twin Surplus; International Currency;

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References

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  1. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007. "The Overvaluation of Renminbi Undervaluation," CESifo Working Paper Series 1918, CESifo Group Munich.
  2. Chinn, Menzie David & Frankel, Jeffrey A., 2006. "Will the Euro Eventually Surpass the Dollar As Leading International Reserve Currency?," Santa Cruz Department of Economics, Working Paper Series qt4hz4n9pb, Department of Economics, UC Santa Cruz.
  3. 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.
  4. Ronald McKinnon & Gunther Schnabl, 2003. "The East Asian Dollar Standard, Fear of Floating, and Original Sin," Working Papers 112003, Hong Kong Institute for Monetary Research.
  5. Ronald McKinnon & Gunther Schnabl, 2009. "The Case for Stabilizing China's Exchange Rate: Setting the Stage for Fiscal Expansion," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(1), pages 1-32.
  6. William R. Cline, 2005. "The Case for a New Plaza Agreement," Policy Briefs PB05-04, Peterson Institute for International Economics.
  7. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2004. "The revived Bretton Woods system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 307-313.
  8. Gabriele Galati & Philip D. Wooldridge, 2006. "The euro as a reserve currency: a challenge to the pre-eminence of the US dollar?," BIS Working Papers 218, Bank for International Settlements.
  9. Yin-Wong Cheung & Xingwang Qian, 2009. "Hoarding of International Reserves: Mrs Machlup's Wardrobe and the Joneses," Review of International Economics, Wiley Blackwell, vol. 17(4), pages 824-843, 09.
  10. McKinnon, Ronald & Schnabl, Gunther, 2006. "Devaluing the dollar: A critical analysis of William Cline's case for a New Plaza Agreement," Journal of Policy Modeling, Elsevier, vol. 28(6), pages 683-694, September.
  11. Schnabl, Gunther & Schobert, Franziska, 2007. "Monetary Policy Operations of Debtor Central Banks in MENA Countries," MPRA Paper 5474, University Library of Munich, Germany.
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Cited by:
  1. Quaas, Georg, 2010. "Does the macroeconomic policy of the global economy’s leader cause the worldwide asymmetry in current accounts?," MPRA Paper 22133, University Library of Munich, Germany.
  2. Ansgar Belke & Gunther Schnabl & Holger Zemanek, 2009. "Real Convergence, Capital Flows, and Competitiveness in Central and Eastern Europe," Ruhr Economic Papers 0147, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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