IDEAS home Printed from https://ideas.repec.org/p/rpp/wpaper/1205.html
   My bibliography  Save this paper

A Growth Model of Global Imbalances

Author

Listed:
  • Lionel Artige
  • Laurent Cavenaile

Abstract

Recent empirical evidence shows that gross official capital transactions flow up- stream in the international financial markets due to government policy objectives and that they account for the current account surpluses observed in the last decade in the fast-growing emerging economies. Following the Asian financial crisis, the governments of these countries have used national wealth to create a financial buffer to stave off or to confront new balance-of-payments crises by accumulating foreign reserves. We argue that government intervention in the capital market has led to forced saving in these countries generating large global imbalances. This paper builds a two-country neoclassical growth model, which takes public saving into ac- count. Calibrated on IMF data and forecasts between 1981 and 2016, the model rightly predicts the reversal and the size of current account balances observed be- tween the advanced economies and other countries from 1998 onwards. Contrary to the recent theoretical literature on global imbalances, our results support the explanatory and predictive power of the neoclassical growth model when it focuses on national saving and not only on private savings.

Suggested Citation

  • Lionel Artige & Laurent Cavenaile, 2012. "A Growth Model of Global Imbalances," CREPP Working Papers 1205, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
  • Handle: RePEc:rpp:wpaper:1205
    as

    Download full text from publisher

    File URL: http://www2.ulg.ac.be/crepp/papers/crepp-wp201205.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Casarico Alessandra, 2001. "Pension systems in integrated capital markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-19, November.
    2. Robert Fenge & Pierre Pestieau, 2005. "Social Security and Early Retirement," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062496, January.
    3. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rpp:wpaper:1205. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mathieu Lefebvre). General contact details of provider: http://edirc.repec.org/data/crulgbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.