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Exchange Rates and Global Rebalancing

Author

Listed:
  • Eichengreen, Barry

    (Asian Development Bank Institute)

  • Rua, Gisela

    (Asian Development Bank Institute)

Abstract

This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the response of imbalances and real exchange rates to shocks. Finally, it analyzes the characteristics of episodes in which chronic current account surpluses (as opposed to deficits) come to an end.

Suggested Citation

  • Eichengreen, Barry & Rua, Gisela, 2011. "Exchange Rates and Global Rebalancing," ADBI Working Papers 278, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0278
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    File URL: http://www.adbi.org/files/2011.04.13.wp278.exchange.rates.global.rebalancing.pdf
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    References listed on IDEAS

    as
    1. Leo de Haan & Hubert Schokker & Anastassia Tcherneva, 2008. "What Do Current Account Reversals in OECD Countries Tell Us About the US Case?," The World Economy, Wiley Blackwell, vol. 31(2), pages 286-311, February.
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    Cited by:

    1. Philip Levy, 2011. "The United States and the PRC : Macroeconomic Imbalances and Economic Diplomacy," Governance Working Papers 23208, East Asian Bureau of Economic Research.

    More about this item

    Keywords

    global imbalances; exchange rates; current account; economic rebalancing; global rebalancing;

    JEL classification:

    • F00 - International Economics - - General - - - General
    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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