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Are Global Imbalances Sustainable?: Post-Crisis Scenarios

  • Luiz de Mello
  • Pier Carlo Padoan

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. Les déséquilibres mondiaux sont-ils soutenables ? : Les scénarios d'après la crise Cette étude évalue la soutenabilité des déséquilibres globaux par des tests de racines unitaires dans le solde de la balance courante (mesurée par rapport au PIB) des États-Unis, de la Chine, du Japon, de l’Allemagne et des pays exportateurs de pétrole en utilisant une méthodologie qui permet des ruptures structurelles dans les niveaux et les tendances des séries statistiques. Nous constatons que les soldes de la balance courante de ces grands pays ou régions sont stationnaires autour de ruptures structurelles qui définissent les épisodes de retournement du solde de la balance courante. Sur la base d’une analyse des situations qui ont conduit aux retournements précédents, il semble que les ruptures structurelles soient associées à des changements de politique budgétaire, de parités de taux de change et de croissance potentielle, une constatation qui souligne la portée des politiques macroéconomiques et structurelles pour assurer la soutenabilité de la balance courante tout en évitant des retournements potentiellement perturbateurs. Ces résultats ont des implications pour les flux de capitaux à long terme après la crise.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 795.

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Date of creation: 21 Jul 2010
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Handle: RePEc:oec:ecoaaa:795-en
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