Global Imbalances and External Adjustment after the Crisis

Global Imbalances and External Adjustment after the Crisis
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Volume/Issue:
2014/151
Series:
IMF Working Papers
Author(s):
Philip Lane, and Gian Milesi-Ferretti
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
August 2014
DOI:
http://dx.doi.org/10.5089/9781498339216.001
ISBN:
9781498339216
ISSN:
1018-5941
Page:
45
This paper has two objectives. First, it reviews the recent dynamics of global imbalances (both 'flow' and 'stock' imbalances), with a special focus on the shifting position of Latin America in the global distribution. Second, it examines the cross-country variation in external adjustment over 2008-2012. In particular, it shows how pre-crisis external imbalances have strong predictive power for post-crisis macroeconomic outcomes, allowing for variation across different exchange rate regimes. We emphasize that the bulk of external adjustment has taken the form of 'expenditure reduction', with 'expenditure switching' only playing a limited role.

Global Imbalances and External Adjustment after the Crisis

Author(s):
Philip Lane, and Gian Milesi-Ferretti
Published Date:
August 2014
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