Index
[Page numbers followed by b, f, n, or t refer to boxed text, figures, footnotes, or tables, respectively.]
A
Advanced economies
need for medium-term consolidation in, 150
policy implications from case studies for, 149, 150
significance of current account imbalances in, 7–8
structural reform needs of, 150–151
B
Basel III requirements, 52, 69, 117
Borrowing, private
constraints to, in China, 101
disincentives and constraints to, in India, 81–82, 85, 86
imbalances in the United Kingdom and, 42, 47
imbalances in the United States and, 24, 25
patterns in the United Kingdom, 43, 43f, 44–45, 47, 50
C
China, external surpluses in
causes of, 93, 96f, 97–101, 148–149
credit access and, 101
development of, 93–96, 94f
domestic consumption and, 95, 97b, 106
exchange rate policy and, 102, 102f, 103f, 106
factor market distortions and, 99, 107
financial sector reform for addressing, 154–155
foreign exchange reserves and, 102–103, 103f
future prospects for, 96–97
interest rate policy and, 100, 101, 104, 104f
investment patterns and, 95–96, 99f, 100
labor market and, 94, 94n, 99, 101, 107
manufacturing sector growth and, 98
policy response to, 102–105
poverty rate and, 96
private saving and, 93–95, 94f, 98–101, 99f, 105f
public saving and, 93, 94f, 104, 148–149
rationale for rebalancing, 105
reform of state-owned enterprises and, 97–98, 99–100, 101
social welfare programs and, 101, 106
sterilization of foreign exchange and, 102–104
strategies for rebalancing, 93, 97b, 106–107, 150, 151, 154–155, 154b
sustainability assessment, 5–6b
Collective action, 150–158
policy action to achieve G20 growth objectives, 150–151
Consumption
in China, 95, 97b, 106
in India, 84, 84f
recommendations for Japanese tax on, 142
in the United Kingdom, 39, 42, 43f, 46
in the United States, 21, 24, 29
Cross-border spillovers
benefits of rebalancing in China, 107
benefits of rebalancing in Germany, 123
global implications of U.K. imbalances, 50–51, 54
global significance of U.S. economy, 32–33, 36
from imbalances in France, 67, 68
from individual current account deficits, 11
from individual current account surpluses, 12–14
macroeconomic model of, 16–18
risk from Japan, 140, 142
risk surveillance, 11, 14–15
threats from export-led growth strategy, 12
Current account balances
assessment methodology, 8
beneficial imbalances, 7
case studies, 8, 147, 148f. See also specific country
detrimental imbalances, 7
future challenges for G20, 158–159
global significance of, 7–8
multilateral surveillance rationale, 14–15
policy implications from case studies, 149–158
saving imbalances as cause of, 147, 148f
simulated gains from upside scenario, 155–158, 156f, 157f, 158f
as source of global financial crisis, 3, 7n
strategy for sustainable recovery, 3, 6, 21
sustainability assessments, 4–6
systemic risk, 6–7
trends, 4, 4f
See also Deficits, current account; Internal imbalances; Surpluses, current account
D
Defense spending, U.S. deficits and, 22, 23b, 26
Deficits, current account
causes of, in case study countries, 147–148
causes of, in France, 57, 62–67, 148
causes of, in Japan, 125, 126
causes of, in the United Kingdom, 39–41
causes of, in the United States, 21, 23b, 24, 28–31, 148
development in France, 57, 58–59
development in the United States, 21, 22–25, 22f
in Germany, 109
multilateral implications, 11
policy implications from case studies, 149, 159
positive and negative sources, 9–10
projections for the United Kingdom, 39–40
saving imbalances as cause of, 147
significance of France’s, 67
strategies for addressing imbalances in the United States, 33–36
Demographic patterns and trends
employment ratios, 71f
entitlement spending in the United States and, 27
implications for current account policymaking, 7
in India, 85
in Japan, 126, 130–131
private saving in Germany and, 117
Dot-com bubble, 23b
E
Economic growth
in China, 93–97, 96f
in Germany, 109–112, 118–119
global significance of U.S. performance, 32–33
in India, 73, 74f, 85–86
in Japan, 125, 128–132, 129f, 130f
strategies for sustainable recovery, 3
in the United Kingdom before financial crisis, 39–40, 40f
U.S. policies to restore, 21
Emerging market economies
French export competitiveness and, 64
future growth in, 158–159
German export competitiveness and, 120
government revenues in, 80, 80f
policy implications from case studies for, 149
saving imbalances in, 148, 149, 151, 162–163
significance of current account imbalances in, 7–8
social indicators in, 78t
U.S. imbalances and dollar pegs in, 30–31
Entitlement spending
in Japan, 133
strategies for improving U.S. economy, 34, 35
trends in the United States, 27–28, 34, 35
upside scenario policy reforms for G20 countries, 152
See also Health care spending; Pension programs; Social assistance programs; Social security spending
Euro area
employment patterns in, 71f
France’s entry into, 58–59
France’s export market share, 63, 64
significance of France’s imbalances for, 67
significance of German economy for, 119
significance of imbalances in, 8
Exchange rate
China’s, 97, 102, 102f, 103f, 106, 154b
France’s, 65f, 69–70
Germany’s, 113–114
model of cross-border effects of, 16–18
undervalued, 12
U.S. external imbalances and, 30, 31
Export-led growth
definition, 10
multilateral risk, 12
as source of surpluses, 10
F
Financial sector
benefits of rebalancing for China’s reform of, 105
causes of financial crisis, 29–30
causes of imbalances in the United Kingdom, 39, 42, 50
future prospects in the United Kingdom, 46
growth in the United Kingdom, 48–49
liquidity requirements in India, 81, 89
liquidity requirements in the United Kingdom, 52–53
recommendations for reform of China’s, 106
recommendations for reform of Germany’s, 120, 121
strategies for addressing India’s imbalances, 89
strategies for addressing U.K. imbalances, 52–54
strategies for improving U.S. economy, 34–35
upside scenario policy reforms for G20 countries, 152–153
See also Regulation, financial
Fiscal imbalances. See Internal imbalances
Fiscal stimulus
China’s response to financial crisis, 96f
Japan’s spending, 131–132
outcomes in France, 61
outcomes in Germany, 118
outcomes in the United Kingdom, 45
U.S. response to financial crisis, 27
France
causes of imbalances in, 57, 60–67, 148
composition of current account balances in, 58f
development of imbalances in, 57–59
entitlement and social welfare spending in, 59–61, 69
exchange rate patterns, 65f
export competitiveness, 62–64, 69–71
financial crisis outcomes in, 59
labor market, 63–64, 65–67, 66f, 70, 154b
Organic Law, 69
private saving–investment balance, 57, 58f, 59f
productivity issues, 63, 64f, 69–70, 72, 154b
projected balances, 59–60
public debt in, 57, 59, 60f, 61, 62f, 67
public saving–investment balance, 57, 59f
regulatory reforms, 69–70
significance of imbalances in, 67
strategies for addressing imbalances in, 57, 59–60, 68–72, 149
sustainability assessment, 5–6b
tax reforms, 70–71, 71
G
Germany
causes of external surpluses in, 109, 112–117, 149
current account projections for, 112
effects of reunification, 109, 110–111, 118
exchange rate, 113–114, 115
financial crisis outcomes in, 112, 118
financial sector, 120
fiscal imbalances in, 118
impediments to saving in, 116–117
labor market, 111, 112–113, 120, 123
manufacturing exports, 113, 113f
population aging in, 117
private domestic investment in, 109, 111–112, 111f, 115–116, 118–119, 119f
private saving in, 109, 112, 115, 116–117
productivity issues in, 116, 118, 119, 120, 121, 154b
public debt in, 109, 112, 118, 119, 122
public saving in, 116
rationale for addressing imbalances in, 118–119
recent economic performance, 109–112, 110f
strategies for addressing imbalances in, 109, 119–123, 150
sustainability assessment, 5–6b
tax policy, 111, 120, 122, 123, 123n
venture capital market, 115, 116f, 120
wages, 109, 110, 111, 112–114, 114f, 118, 120
women in workforce, 120, 152, 154b
work rule reforms, 110–111
Global financial crisis
causes of, 7n, 13–14, 25, 29–30, 29n
Group of Twenty response, 3
outcomes in France, 59
outcomes in Germany, 112, 118
outcomes in Japan, 127
outcomes in the United States, 25, 27
precrisis analysis of imbalances, 11
recovery status, 4
significance of current account balances in recovery from, 3, 7–8
Group of Twenty, 3
assessment of key imbalances in, 4–6
collective action to achieve growth objectives of, 150–158
future policymaking challenges, 159
Mutual Assessment Process, 3, 4–6, 159
national saving and investment patterns, 42f
public debt, 126f
revenue collection, 80, 80f
structural reform needs, 152, 153–154b
tax and entitlement reform recommendations, 152
See also specific country
H
Health care spending
fiscal imbalances in the United States and, 23b, 27
in France, 69
in India, 89
life expectancy in the United States and, 27f
recommendations for China, 106
strategies for improving U.S. economy, 34
in the United Kingdom, 41
Housing bubble
U.K., 39, 43–45, 47–48, 148
U.S., 7n, 24, 25, 28, 29, 30
I
Incomes, household
in China, 93–94, 95f, 105
French household saving and, 76
in India, 84, 84f
in Japan, 133, 134
in U.K., 42, 43f, 44, 46
U.S. household saving and, 36
India
balance of payments crisis (1991), 73
bond market, 89
causes of imbalances in, 73, 77–85, 148
credit access in, 85, 86
demographic trends in, 85
financial controls in, 81–84, 89, 90
Fiscal Responsibility and Budget Management Act, 74–75
future challenges for, 77
government securities, 81, 83, 83t, 84n
health care spending, 89
infrastructure investment, 86
labor market, 154b
macroeconomic stability, 87
private saving and investment in, 73, 75–77, 76f, 82f, 83f, 84–85
public debt, 73, 73f, 74–75, 77, 86–87
public saving and investment in, 75, 76f
public spending in, 78–79, 88–89
recent economic performance, 73–77, 74f
revenue collection, 78, 79–81, 87–88, 90
significance of fiscal imbalances in, 85–87
size of deficits, 73
social indicators, 78, 78t, 79
strategies for addressing imbalances in, 87–90
subsidy programs, 88
sustainability assessment, 5–6b
Indicative guidelines for sustainability assessments, 4–6, 5–6b, 5f
Interest rates
in China, 100, 101, 104, 104f
future prospects for the United States, 31, 33
global financial crisis and, 29n
global spillovers of rebalancing in China, 107
India’s, 81–82, 83–84
model of cross-border effects, 16–18
saving behavior and, 47
as source of global imbalances, 13–14
in the United Kingdom, 47, 50
in the United States, 24, 25, 29, 31, 33
Internal imbalances
causes of, in France, 60–61
causes of, in India, 73, 77–85
causes of, in the United States, 22, 23, 23b, 26–28
development in India, 73, 74–75
development in the United States, 21, 22f, 25
future challenges for the United States, 27–28
future prospects for France, 59–60
in Germany, 118
outcomes of global financial crisis in the United States, 27
patterns in France, 58–59
significance of France’s, 67
significance of India’s, 85–87
strategy for sustainable recovery, 3, 6, 21
trends, 4
International Monetary Fund
assessment of key imbalances in G20 countries, 4–6
exchange rate policy obligations, 12n
Investment, private
as cause of imbalances in case studies, 148, 149
in China, 95–96, 96–97, 100
in France, 57, 58f, 59f
in Germany, 109, 111–112, 111f, 115–116, 118–119, 119f
impediments to, 115–117, 129
in India, 75–76, 86
in Japan, 127, 129, 131
in the United Kingdom, 40f, 41, 42, 42f, 46
in the United States, 24
Investment, public
in France, 59f
in India, 75
in Japan, 127–128
J
Japan
causes of fiscal deficits, 125, 126, 128–138, 147, 148
demographic trends, 126, 130–131
distribution of government spending, 134f, 141–142
earthquake (2011), 127
external surpluses, 127, 149
financial crisis outcomes, 127
Fiscal Management Strategy, 141
government bond market, 137–138, 138f, 139, 140
household income, 133, 134
investment patterns in, 127, 129, 131
labor market, 130–131, 130f, 136, 141, 154b
monetary policy, 131–132
nonfinancial corporate saving, 136–137, 136f
pension program, 142
private saving, 125, 128, 134–137, 135f
productivity trends, 129, 154b
projected imbalances, 128, 132
public debt, 125, 132f, 139–140, 139f
rationale for addressing imbalances in, 125, 138–140
recent economic performance, 125, 126f, 130f
relationship between household and corporate saving, 135b
risk of global spillover effects of imbalances in, 140, 142
services sector, 129, 131, 141
small- and medium-sized firms, 131, 141
social welfare and entitlement spending, 133, 134f, 142
state-owned financial institutions, 138
strategies for addressing imbalances in, 125, 140–142, 149, 150
sustainability assessment, 5–6b
tax policy and collection, 132–133, 133t, 136–137, 141–142
wages, 136
women in workforce, 141, 152, 154b
L
Labor markets
China’s, 94, 94n, 99, 101, 107
France’s export competitiveness and, 63–64, 65–67, 70, 154b
German, 109, 110, 111, 112–114, 114f, 120, 123
India’s, 154b
international comparison of demographic patterns, 71f
Japan’s, 130–131, 130f, 136, 141, 154b
recommended reforms for France, 70, 72
strategies for improving U.S. economy, 34
tax percentage of labor costs, 121f
U.K., 154b
upside scenario policy reforms for G20 countries, 152, 153–154b
U.S., 34, 154b
women’s participation in, 71t, 120, 141, 152, 154b
See also Productivity
Liquidity trap, 7, 13, 14, 15, 16–18, 107
M
Monetary policy
sources of Japan’s slow growth, 131–132
strategies for addressing U.K. imbalances, 51–52
U.S., global financial crisis and, 29n
Mutual Assessment Process, 159
indicative guidelines, 4–6, 5–6b, 5f
objectives, 3
origins, 3
O
Oil market, U.S. external imbalances and, 31
Originate-to-distribute lending, 29
P
Pension programs
in China, 101
in France, 59–60, 69
in Japan, 142
in the United Kingdom, 51
upside scenario policy reforms for G20 countries, 152
in the United States, 27–28
Pittsburgh Summit, 3
Policymaking
beneficial current account imbalances, 7
China’s response to rising saving, 102–105
detrimental current account imbalances, 7
export-led growth, 12
future challenges for G20 countries, 159
future challenges for the United States, 31–33
lessons from case studies, 149–158, 159
multilateral surveillance rationale, 14–15
shortcomings of U.S. fiscal rules, 28
sources of China’s economic growth, 97–98, 99–100
sources of U.S. twin deficit, 22–25
strategies for addressing China’s imbalances, 93, 97b, 106–107
strategies for addressing France’s imbalances, 59–60
strategies for addressing Germany’s imbalances, 109, 119–123
strategies for addressing India’s imbalances, 87–90
strategies for addressing Japan’s imbalances, 140–142
strategies for addressing U.K. imbalances, 51–54
strategies for improving U.S. economy, 33–36
U.K. response to financial crisis, 45–46
upside scenario, 150, 151–155
Political functioning
obstacles to fiscal rebalancing in the United States, 28
public spending in India and, 77, 78–79
Poverty in China, 96
Privatization, of China’s housing stock, 101
Productivity
in China, 103f, 154b
in France, 63, 64f, 69–70, 72, 154b
in Germany, 116, 118, 119, 120, 121, 154b
in India, 154b
in Japan, 129, 141, 154b
in the United Kingdom, 42
upside scenario policy reforms for G20 countries, 152, 154b
Product markets
regulation in OECD countries, 66f
rigidities in France, 65–67, 70, 72
upside scenario of policy reforms, 152, 153–154b
Public debt
in France, 57, 59, 60f, 61, 62f, 67, 68–69
in Germany, 109, 112, 118, 119, 122
in India, 73, 73f, 74–75, 77, 78–84, 86–87
in Japan, 125, 132f, 139–140, 139f
U.K. strategies to reduce, 48
in the United Kingdom, 45–46, 45f, 48–49
in the United States, 27, 28, 31, 32f, 33
R
Regulation, business
corporate saving in Germany and, 116–117
in France, 70
recommendations for Japan, 141
recommendations for rebalancing China’s surplus, 107
upside scenario product market reforms for G20 countries, 154b
Regulation, financial
as cause of current account imbalances, 148
in development of U.K. imbalances, 50
in France, 69–70
in India, 81–84, 85–86, 86n, 90
strategies for addressing U.K. imbalances, 52–54
in the United States, 21, 24, 29–30, 34–35
S
Saving, private
as cause of current account deficits, 147, 148
in China, 93–95, 94f, 96–97, 98–101, 99f, 100f, 105f
corporate veil theory, 135b
in France, 57, 58f, 59f
in G20 countries, 42f
in Germany, 109, 112, 115, 116–117
in India, 73, 75–77, 76f, 83f, 84–85
in Japan, 125, 128, 134–137, 135f, 136f
sources of detrimental imbalances, 7
in the United Kingdom, 39, 40f, 41–42, 41f, 42f, 44–45, 46–48
in the United States, 24, 25, 28, 32, 36
Saving, public
causes of current account surpluses, 147
in China, 93–94, 94f, 104, 148–149
cross-border policy effects, 13–14
in France, 57, 59f
in Germany, 116
in India, 75
in Japan, 128
model of cross-border policy effects, 16–18
sources of detrimental imbalances, 7
strategies for addressing external imbalances, 147–148
in the United Kingdom, 40–41, 40f, 41f, 45–46, 51
in the United States, 21, 22f, 24, 36
Seoul summit, 3
Social assistance programs
in China, 101, 106
in India, 78, 79, 88–89
See also Entitlement spending
Social security spending
in France, 57, 59, 60–61
in Japan, 126, 133, 134f
in the United States, 23b, 27–28, 34
Stability and Growth Pact, 59, 109, 118
State-owned enterprises
Japanese saving and insurance institutions, 138
recommendations for China’s, 107
sources of China’s economic growth, 97–98, 99–100, 101
Subsidies
China’s factor market distortions, 99, 107
India’s, 88
Surpluses, current account
causes of Germany’s, 112–118
in export-led growth strategy, 12
influences on public saving behavior and, 147–148
in Japan, 127, 127f
model of spillover effects, 16–18
multilateral implications, 11, 12–14
multilateral surveillance rationale, 15
patterns and trends in Germany, 109–112, 110f
policy implications from case studies, 149, 150, 159
positive and negative sources, 10, 12
in recent German history, 109–112, 110f
saving imbalances as cause of, 147
as source of global financial crisis, 13–14
strategies for reducing Germany’s, 119–123
structural reform needs in advanced economies, 150–151
See also China, external surpluses in
Surveillance
rationale, 14–15
risk indicators, 11
T
Tax policy and collection
in France, 70–71, 71
in Germany, 111, 121f, 122f
in India, 78, 79–81, 87–88, 90
international comparison, 80f
in Japan, 132–133, 133t, 136–137, 141–142
strategies for addressing Germany’s imbalances, 120, 122, 123, 123n
strategies for improving U.S. economy, 34, 35
in the United Kingdom, 48–49, 49f, 52
upside scenario policy reforms for G20 countries, 152, 153b
in the United States, 22, 23b, 26, 26n, 27, 34, 35
U
U.K. See United Kingdom
United Kingdom (U.K.)
causes of imbalances in, 39, 46–50, 148
credit conditions, 47, 50
development of imbalances in, 39–45
Financial Policy Committee, 52, 53
financial sector, 48–49, 50, 52–53
future prospects, 45–46, 50
global implications of imbalances in, 50–51, 54
household wealth and debt trends, 43–45, 43f, 44f
interest rates, 47, 50
monetary policy, 51–52
policy responses to financial crisis, 45–46
private consumption in, 39, 42, 43f, 46
private investment in, 40f, 41, 42, 42f, 46
private saving in, 39, 40f, 41f, 42f 41–42, 44–45, 46–48
productivity issues, 42
public debt, 45–46, 45f, 48–49
public saving in, 40–41, 40f, 41f, 45–46, 51
rationale for addressing imbalances in, 50
strategies for addressing imbalances in, 39, 51–54, 149
sustainability assessment, 5–6b
tax policy and collections, 48–49, 49f, 52
United States (U.S.)
causes of external imbalances, 21, 28–31, 148
causes of internal imbalances, 23b, 26–28
defense spending, 22, 23b, 26
development of deficits in, 21–25, 22f
exchange rates, 30, 31
financial regulation in, 21, 24, 29–30, 34–35
foreign investment in, 24, 25f, 26f, 30–31, 30f, 32
future challenges, 21, 32–33
global significance of economy of, 32–33
home equity extractions preceding financial crisis, 24, 24f
housing boom, 7n, 24, 25, 28, 29, 30
interest rates, 24, 25, 29, 31, 33
labor market, 34, 154b
national saving and investment, 21, 22f, 24, 36
onset and effects of financial crisis, 25, 27, 29
PAYGO rule, 28, 28n
private consumption in, 21
private investment in, 24
private saving in, 24, 25, 28, 32, 36
public debt, 27, 28, 31, 32f, 33
rationale for addressing imbalances in, 31
rebalancing strategies, 21, 33–36, 149
social welfare and entitlement spending, 23b, 27–28, 34, 35
sustainability assessment, 5–6b
tax policy and collection, 22, 23b, 26, 26n, 27, 34, 35
Upside scenario
policy reforms under, 150–155
simulated gains from, 155–158, 156f, 157f
U.S. See United States