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Liquidity shocks, real interest rates, and global imbalances

Author

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  • David Andolfatto

Abstract

The author uses a simple neoclassical model to show how liquidity shocks at home and abroad can contribute to trade imbalances and low real interest rates. The author’s interpretation is consistent with Bernanke’s (2005) “global saving glut” hypothesis.

Suggested Citation

  • David Andolfatto, 2012. "Liquidity shocks, real interest rates, and global imbalances," Review, Federal Reserve Bank of St. Louis, issue May, pages 187-196.
  • Handle: RePEc:fip:fedlrv:y:2012:i:may:p:187-196:n:v.94no.3
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    File URL: https://files.stlouisfed.org/files/htdocs/publications/review/12/05/187-196Andolfatto.pdf
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    References listed on IDEAS

    as
    1. Pengfei Wang & Yi Wen & Zhiwei Xu, 2012. "Two-way capital flows and global imbalances: a neoclassical approach," Working Papers 2012-016, Federal Reserve Bank of St. Louis.
    2. Zheng Song & Kjetil Storesletten & Fabrizio Zilibotti, 2011. "Growing Like China," American Economic Review, American Economic Association, vol. 101(1), pages 196-233, February.
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    Citations

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    Cited by:

    1. Joshua R Hendrickson, 2015. "Should the government increase investment in infrastructure improvements when interest rates decline?," Economics Bulletin, AccessEcon, vol. 35(3), pages 1687-1692.
    2. Luis Eduardo Arango & Wilmar Cabrera & Esteban Gómez & Juan Carlos Mendoza, 2013. "Tasa de interés de largo plazo, interés técnico y pasivo pensional," Borradores de Economia 796, Banco de la Republica de Colombia.
    3. Arndt Sven W., 2012. "The "Great Moderation" in a Dual Exchange Rate Regime," Global Economy Journal, De Gruyter, vol. 12(4), pages 1-12, December.

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