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Current Global Imbalances: Might Keynes Be of Help?

Author

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  • Anna Maria Carabelli
  • Mario Aldo Cedrini

    () (SEMEQ Department - Faculty of Economics - University of Eastern Piedmont)

Abstract

A large number of interpretations has been proposed for current global imbalances, with a variety of future scenarios for world economy. The perspective here adopted tries to be fully respectful of the assumption of global economic interdependence as well as to cope with the complexity of a political, and not exclusively an economic, problem. By the use of the three alternatives outlined by Keynes in his 1945 memorandum "Overseas Financial Policy in Stage III" for the restart of multilateralism at a global level, we propose to rearrange views about current imbalances according to the unilateral, bilateral or multilateral nature of the adjustment they propose - if any - for their unwinding. Comparisons are made between Keynes's "Starvation Corner" and "gloomy views", together with scenarios suggesting the need of unilateral adjustments. Keynes's "Temptation" is used to analyse views stating that global imbalances are sustainable due either to the working of market mechanisms, related to the strength of the American economy, or to the (tacit) agreement of a "revived Bretton Woods system". The parallel with Keynes's "Justice" leads to consider views highlighting shared responsibilities for the imbalances and prompting for collective actions to reduce them.

Suggested Citation

  • Anna Maria Carabelli & Mario Aldo Cedrini, 2007. "Current Global Imbalances: Might Keynes Be of Help?," Working Papers 113, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  • Handle: RePEc:upo:upopwp:113
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    File URL: http://semeq.unipmn.it/files/quaderno28completo.pdf
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    References listed on IDEAS

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    1. Ricardo J. Caballero, 2006. "On the Macroeconomics of Asset Shortages," NBER Working Papers 12753, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Anna M. Carabelli & Mario A. Cedrini, 2010. "“Veiling The Controversies with Dubious Moral Attitudes”? Creditors and Debtors in Keynes’s Ethics of International Economic Relations," Working Papers 127, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    2. Carabelli, Anna & Cedrini, Mario, 2013. "Globalization and Keynes's Ideal of a 'Sounder Political Economy between All Nations," CESMEP Working Papers 201305, University of Turin.
    3. Anna Carabelli, 2012. "A new methodological approach to economic theory: what I have learnt from 30 years of research on Keynes," Chapters,in: Keynes’s General Theory for Today, chapter 5, pages 79-97 Edward Elgar Publishing.
    4. Anna Carabelli & Mario Cedrini, 2010. "Keynes and the Complexity of International Economic Relations in the Aftermath of World War I," Journal of Economic Issues, Taylor & Francis Journals, vol. 44(4), pages 1009-1028.
    5. Paolo Paesani & Annalisa Rosselli, 2014. "The Case for a Supra-national Control on Commodities in the post WWII World: Novel Perspectives from FAO and Kaldor Archives," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2014(1), pages 5-30.
    6. Jörg Bibow, 2010. "Global imbalances, the US dollar, and how the crisis at the core of global finance spread to "self-insuring" emerging market economies," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 7(2), pages 325-359.

    More about this item

    Keywords

    Global imbalances; Adjustment dynamics; US economy; John Maynard Keynes;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F01 - International Economics - - General - - - Global Outlook
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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