Global rebalancing: Effects on trade and employment
A sustained reduction of global current-account imbalances must include a decline in the share of household consumption in aggregate demand in the United States and the opposite development in China. Accordingly, import demand would decline in the United States and increase in China. Given non-homothetic demand preferences, the resulting change in the income distribution of global import demand affects both the intensity and pattern of other countries’ exports. Simulations suggest that, for the world economy, the net effect of this shift would be a decline in industrial exports, especially from labor-intensive sectors producing consumer durables. A multilaterally coordinated rebalancing that would also include an increase in the share of household consumption in aggregate demand of developed country surplus economies would reduce these adverse effects on trade and employment. Apart from the countries undertaking rebalancing, developing countries in East and South-East Asia face the greatest adjustment pressure from global rebalancing.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zhang, Wenlang & Zhang, Zhiwei & Han, Gaofeng, 2010. "How does the US credit crisis affect the Asia-Pacific economies?--Analysis based on a general equilibrium model," Journal of Asian Economics, Elsevier, vol. 21(3), pages 280-292, June.
- Colin Kirkpatrick & Armando Barrientos, 2004. "The Lewis Model After 50 Years," Manchester School, University of Manchester, vol. 72(6), pages 679-690, December.
- Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2011.
"China has reached the Lewis turning point,"
China Economic Review,
Elsevier, vol. 22(4), pages 542-554.
- Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2010. "China has reached the lewis turning point," IFPRI discussion papers 977, International Food Policy Research Institute (IFPRI).
- DennisTao Yang & VivianWeijia Chen & Ryan Monarch, 2010. "Rising Wages: Has China Lost Its Global Labor Advantage?," Pacific Economic Review, Wiley Blackwell, vol. 15(4), pages 482-504, October.
- Dennis Tao Yang & Vivian Chen & Ryan Monarch, 2009. "Rising Wages: Has China Lost Its Global Labor Advantage?," Economics Program Working Papers 09-03, The Conference Board, Economics Program.
- Yang, Dennis T. & Chen, Vivian & Monarch, Ryan, 2010. "Rising Wages: Has China Lost Its Global Labor Advantage?," IZA Discussion Papers 5008, Institute for the Study of Labor (IZA).
- Knight, John & Deng, Quheng & Li, Shi, 2011. "The puzzle of migrant labour shortage and rural labour surplus in China," China Economic Review, Elsevier, vol. 22(4), pages 585-600.
- John Knight & Deng Quheng and Li Shi, 2010. "The Puzzle of Migrant Labour Shortage and Rural Labour Surplus in China," Economics Series Working Papers 494, University of Oxford, Department of Economics.
- Ana Cecília Fieler, 2011. "Nonhomotheticity and Bilateral Trade: Evidence and a Quantitative Explanation," Econometrica, Econometric Society, vol. 79(4), pages 1069-1101, 07.
- Olivier Blanchard & Francesco Giavazzi, 2006. "Rebalancing Growth in China: A Three-Handed Approach," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(4), pages 1-20.
- Blanchard, Olivier J & Giavazzi, Francesco, 2006. "Rebalancing Growth in China: A Three-Handed Approach," CEPR Discussion Papers 5403, C.E.P.R. Discussion Papers.
- Korinek, Anton & Servén, Luis, 2016. "Undervaluation through foreign reserve accumulation: Static losses, dynamic gains," Journal of International Money and Finance, Elsevier, vol. 64(C), pages 104-136.
- Korinek, Anton & Serven, Luis, 2010. "Undervaluation through foreign reserve accumulation : static losses, dynamic gains," Policy Research Working Paper Series 5250, The World Bank.
- Jörg Mayer, 2010. "Global Rebalancing: Effects On Trade Flows And Employment," UNCTAD Discussion Papers 200, United Nations Conference on Trade and Development.
- Henk Kranendonk & Johan Verbruggen, 2008. "Decomposition of GDP Growth in Some European Countries and the United States," De Economist, Springer, vol. 156(3), pages 295-306, September.
- Henk Kranendonk & Johan Verbruggen, 2008. "Decomposition of GDP-growth in some European Countries and the United States," CPB Memorandum 203, CPB Netherlands Bureau for Economic Policy Analysis.
- Markusen, James R., 2013. "Putting per-capita income back into trade theory," Journal of International Economics, Elsevier, vol. 90(2), pages 255-265.
- James R. Markusen, 2010. "Putting Per-Capita Income Back into Trade Theory," NBER Working Papers 15903, National Bureau of Economic Research, Inc.
- Markusen, James R., 2010. "Putting Per-Capita Income back into Trade Theory," CEPR Discussion Papers 7790, C.E.P.R. Discussion Papers.
- repec:fip:fedgsq:y:2005:i:mar10 is not listed on IDEAS
- Yilmaz Akyüz, 2011. "Export Dependence and Sustainability of Growth in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 19(1), pages 1-23, 01.
- Luiz de Mello & Pier Carlo Padoan, 2011. "Are Global Imbalances Sustainable? Post Crisis Scenarios," Review of Economics and Institutions, Università di Perugia, vol. 2(1).
- Luiz de Mello & Pier Carlo Padoan, 2010. "Are Global Imbalances Sustainable?: Post-Crisis Scenarios," OECD Economics Department Working Papers 795, OECD Publishing.
- Jahangir Aziz & Li Cui, 2007. "Explaining China’s Low Consumption; The Neglected Role of Household Income," IMF Working Papers 07/181, International Monetary Fund.
- Hunter, Linda, 1991. "The contribution of nonhomothetic preferences to trade," Journal of International Economics, Elsevier, vol. 30(3-4), pages 345-358, May.
- Aldo Barba & Massimo Pivetti, 2009. "Rising household debt: Its causes and macroeconomic implications--a long-period analysis," Cambridge Journal of Economics, Oxford University Press, vol. 33(1), pages 113-137, January. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:23:y:2012:i:6:p:627-642. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.