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The Post-crisis Narrowing of International Imbalances: Cyclical or Durable?

Listed author(s):
  • Patrice Ollivaud


  • Cyrille Schwellnus


After peaking in the first half of 2008, international imbalances declined sharply during the global crisis of 2008-09, in part reflecting cyclical factors such as large contractions in domestic demand on the back of bursting housing bubbles in a number of deficit countries, as well as large declines in cross-border capital flows, interest rates and commodity prices. This paper suggests that business and housing cycles alone account for around half of the decline in international imbalances, with real exchange rate and fiscal adjustments explaining only around one fifth. A range of stylised scenarios for the major trading areas that extends the short-term projections in OECD Economic Outlook No. 93 of May 2013 to 2020 suggests that in the absence of policy adjustments beyond 2014 international imbalances could rebound as output gaps gradually close and housing markets normalise, though to levels below the pre-crisis peak. Ambitious fiscal adjustment in countries with the largest remaining fiscal imbalances and selected structural reforms could offset the cyclical rebound in international imbalances and prevent diverging net asset positions in most areas. Moreover, ambitious fiscal and structural policy adjustments would provide some margin in case upside risks to international imbalances -- such as renewed housing booms that could be triggered by a rebound in cross-border capital flows or higher oil prices -- materialise. La baisse des déséquilibres mondiaux après la crise : Cyclique ou durable ? Après avoir atteint des sommets dans la première moitié de l’année 2008, les déséquilibres mondiaux ont largement baissé durant la crise de 2008-09, reflétant en partie des facteurs cycliques tels que la contraction de la demande intérieure liée notamment à l’éclatement des bulles immobilières dans de nombreux pays déficitaires, ou bien des diminutions importantes dans les flux internationaux de capitaux, les taux d’intérêt et les prix des matières premières. Ce papier soutient que les cycles liés à la conjoncture et au marché du logement expliquent à eux seuls environ la moitié de la baisse des déséquilibres mondiaux, tandis que les mouvements des taux de change et les corrections budgétaires seulement un cinquième. Un éventail de scénarios stylisés pour les principales zones commerciales qui étendent les projections à courtterme des Perspectives économiques de l’OCDE No. 93 de mai 2013, jusqu’en 2020 suggère qu’en l’absence d’une révision des politiques au-delà de 2014, les déséquilibres mondiaux pourraient remonter du fait de la fermeture des écarts de production et de la normalisation sur le marché des logements, mais toutefois à des niveaux inférieurs au sommet d’avant la crise. Des ajustements budgétaires ambitieux pour les pays avec les plus importants déséquilibres budgétaires, ajoutées à des réformes structurelles sélectionnées peuvent contrebalancer la remontée cyclique des déséquilibres mondiaux et empêcher des positions nettes extérieures divergentes. En outre, des révisions ambitieuses des politiques budgétaires et structurelles fourniraient une marge en cas de réalisation de risques à la hausse sur les déséquilibres mondiaux, tels qu’un nouveau boom immobilier qui viendrait d’une remontée des flux internationaux de capitaux ou bien des prix du pétrole plus élevés.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 1062.

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Date of creation: 25 Jun 2013
Handle: RePEc:oec:ecoaaa:1062-en
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  1. Chinn, Menzie D. & Ito, Hiro, 2007. "Current account balances, financial development and institutions: Assaying the world "saving glut"," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 546-569, June.
  2. Alberto Alesina & Silvia Ardagna & Giuseppe Nicoletti & Fabio Schiantarelli, 2005. "Regulation And Investment," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 791-825, 06.
  3. Lukas Vogel, 2011. "Structural reforms and external rebalancing in the euro area: a model-based analysis," European Economy - Economic Papers 2008 - 2015 443, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  4. Jean-Marc Fournier & Isabell Koske & Isabelle Wanner & Vera Zipperer, 2013. "The Price of Oil – Will it Start Rising Again?," OECD Economics Department Working Papers 1031, OECD Publishing.
  5. Anna Ivanova, 2012. "Current Account Imbalances; Can Structural Policies Make a Difference?," IMF Working Papers 12/61, International Monetary Fund.
  6. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
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