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Can East Asia be an Engine of Growth for the World Economy?

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  • THORBECKE, Willem

Abstract

The U.S. functioned as an engine of growth until the financial crisis. Now, U.S. imports have plummeted. This paper considers whether East Asia can be an engine of growth. Using data on consumption imports from 27 countries, the results indicate that income increases in East Asian countries would cause large increases in imports. The evidence also implies that an RMB appreciation would raise China's imports. Thus if domestic markets rather than exports could drive job creation in Asia, not only would Asian consumers enjoy the fruits of their labor but the world economy would have a new locomotive to pull it out of recession.

Suggested Citation

  • THORBECKE, Willem, 2009. "Can East Asia be an Engine of Growth for the World Economy?," Discussion papers 09006, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:09006
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    File URL: https://www.rieti.go.jp/jp/publications/dp/09e006.pdf
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    References listed on IDEAS

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    1. Maurice Obstfeld & Kenneth Rogoff, 2007. "The Unsustainable U.S. Current Account Position Revisited," NBER Chapters,in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 339-376 National Bureau of Economic Research, Inc.
    2. Koichiro Kamada & Izumi Takagawa, 2005. "Policy coordination in East Asia and across the Pacific," International Economics and Economic Policy, Springer, vol. 2(4), pages 275-306, December.
    3. Thorbecke Willem, 2006. "How Would an Appreciation of the Renminbi Affect the U.S. Trade Deficit with China?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(3), pages 1-17, December.
    4. Thorbecke, Willem, 2008. "Global imbalances, triangular trading patterns, and the yen/dollar exchange rate," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 503-517, December.
    5. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2010. "China's Current Account and Exchange Rate," NBER Chapters,in: China's Growing Role in World Trade, pages 231-271 National Bureau of Economic Research, Inc.
    6. Garcia-Herrero, Alicia & Koivu, Tuuli, 2007. "Can the chinese trade surplus be reduced through exchange rate policy?," BOFIT Discussion Papers 6/2007, Bank of Finland, Institute for Economies in Transition.
    7. Menzie D. Chinn, 2005. "Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(3), pages 460-485, October.
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    Cited by:

    1. Thorbecke, Willem, 2011. "Transpacific Imbalances and Macroeconomic Codependency," ADBI Working Papers 299, Asian Development Bank Institute.
    2. Willem Thorbecke, 2010. "Investigating the Effect of Exchange Rate Changes on the People’s Republic of China’s Processed Exports," Finance Working Papers 21989, East Asian Bureau of Economic Research.

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