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The Origins of Global Imbalances

Author

Listed:
  • Jan Bruha
  • Jiri Podpiera

Abstract

In this paper we study the endogenous response of unequally developed regions to a drop in investment and trade costs in a general equilibrium model. The response is characterized by a rise in foreign direct investment in the underdeveloped region and increased consumption in the developed one, leading to trade imbalances between the regions. We hereby propose that declining investment and trade costs could have caused this century’s global imbalances.

Suggested Citation

  • Jan Bruha & Jiri Podpiera, 2008. "The Origins of Global Imbalances," Working Papers 2008/7, Czech National Bank, Research Department.
  • Handle: RePEc:cnb:wpaper:2008/7
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    File URL: http://www.cnb.cz/en/research/research_publications/cnb_wp/download/cnbwp_2008_07.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why the Recession could happen again
      by Bruno Duarte in EUnomics on 2018-10-15 20:23:54

    More about this item

    Keywords

    Economic development; foreign direct investment; global imbalances; multi-country general-equilibrium model.;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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