IDEAS home Printed from https://ideas.repec.org/a/pia/review/v2y2011i1n3.html
   My bibliography  Save this article

Are Global Imbalances Sustainable? Post Crisis Scenarios

Author

Listed:
  • Luiz de Mello
  • Pier Carlo Padoan

    (Organisation de Coopération et de Développement Économiques (OCDE))

Abstract

This paper assesses the sustainability of global imbalances by testing for the presence of unit roots in the current account positions (measured in relation to GDP) of the United States, China, Japan, Germany and the oil-exporting countries using a methodology that allows for structural breaks in levels and trends. We find that the external positions of these major countries/regions are stationary around structural breaks, which define episodes of current account reversals. On the basis of an event analysis of past reversals, it appears that structural breaks are associated with shifts in the fiscal stance, exchange rate parities and potential output growth, a finding that underscores the scope for macroeconomic and structural policies to ensure the sustainability of external positions while avoiding potentially disruptive reversals. These findings have implications for long-term capital flows after the crisis.

Suggested Citation

  • 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).
  • Handle: RePEc:pia:review:v:2:y:2011:i:1:n:3
    as

    Download full text from publisher

    File URL: http://www.rei.unipg.it/rei/article/view/23
    Download Restriction: Requires registration. Users must be registered and log in to access full text

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mayer, Jörg, 2012. "Global rebalancing: Effects on trade and employment," Journal of Asian Economics, Elsevier, vol. 23(6), pages 627-642.
    2. repec:taf:jitecd:v:27:y:2018:i:6:p:638-654 is not listed on IDEAS
    3. Christophe Andre & Mehmet Balcilar & Tsangyao Chang & Luis Alberiko Gil-Alana & Rangan Gupta, 2018. "Current account sustainability in G7 and BRICS: Evidence from a long-memory model with structural breaks," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(6), pages 638-654, August.
    4. Vito Tanzi, 2011. "The Return to Fiscal Rectitude After the Recent Escapade," Rivista di Politica Economica, SIPI Spa, issue 3, pages 253-277, JULY-SEPT.

    More about this item

    Keywords

    global imbalances; current account sustainability; capital flows;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pia:review:v:2:y:2011:i:1:n:3. 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: (Ubaldo Pizzoli). General contact details of provider: http://edirc.repec.org/data/deperit.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.