SECTION IV. Global Imbalances: In Midstream
Author:
Mr. Olivier J Blanchard
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Language:
English
Keywords:
SEM; financial system risk; monetary policy; market; bank assets; dollar; FX liquidity insurance scheme; monetary policy action; market participant; Inflation; Currencies; Current account deficits; International monetary system; Global; Asia and Pacific; Europe; Eastern Europe; Central and Eastern Europe
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Abstract

Before the crisis, there were strong arguments for reducing global imbalances. As a result of the crisis, there have been significant changes in saving and investment patterns across the world and imbalances have narrowed considerably. Does this mean that imbalances are a problem of the past? Hardly. This paper argues that there is an urgent need to implement policy changes to address the remaining domestic and international distortions that are a key cause of imbalances. Failure to do so could result in the world economy being stuck in “midstream,” threatening the sustainability of the recovery.

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Cover Reconstructing the World Economy
Reconstructing the World Economy
Author:
Il SaKong
and
Mr. Olivier J Blanchard
ISBN:
9781589069770
Publication Date:
19 Jul 2010
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589069770.072
Pages:
152
  • <sup><xref ref-type="fig" rid="Rch08fig01">Figure 8.1</xref></sup>
    View in gallery
    Figure 8.1

    Sum of absolute value of world current account balances

    (ratio of world GDP).

  • <sup><xref ref-type="fig" rid="Rch08fig02">Figure 8.2</xref></sup>
    View in gallery
    Figure 8.2

    Global imbalances, 1996–2008.

  • <sup><xref ref-type="fig" rid="Rch08fig03">Figure 8.3</xref></sup>
    View in gallery
    Figure 8.3

    Saving and investment trends

    (in percent of world GDP).

  • <sup><xref ref-type="fig" rid="Rch08fig04">Figure 8.4</xref></sup>
    View in gallery
    Figure 8.4

    Saving and investment trends

    (in percent of domestic GDP).

  • <sup><xref ref-type="fig" rid="Rch08fig05">Figure 8.5</xref></sup>
    View in gallery
    Figure 8.5

    World capital flows, 1996–2008.

  • <sup><xref ref-type="fig" rid="Rch08fig06">Figure 8.6</xref></sup>
    View in gallery
    Figure 8.6

    United States current account deficit and capital inflows

    (ratio of GDP).

  • <sup><xref ref-type="fig" rid="Rch08fig07">Figure 8.7</xref></sup>
    View in gallery
    Figure 8.7

    Current account projections

    (in percent of world GDP).

  • <sup><xref ref-type="fig" rid="Rch08fig08">Figure 8.8</xref></sup>
    View in gallery
    Figure 8.8

    Net foreign asset projections

    (in percent of world GDP).

  • <sup><xref ref-type="fig" rid="Rch08fig09">Figure 8.9</xref></sup>
    View in gallery
    Figure 8.9

    Real effective exchange rates, 1996–2009.

  • <sup><xref ref-type="fig" rid="Rch10fig01">Figure 10.1</xref></sup>
    View in gallery
    Figure 10.1

    U.S. household wealth and disposable income.

  • <sup><xref ref-type="fig" rid="Rch10fig02">Figure 10.2</xref></sup>
    View in gallery
    Figure 10.2

    Structure of China’s national savings.

  • <sup><xref ref-type="fig" rid="Rch10fig03">Figure 10.3</xref></sup>
    View in gallery
    Figure 10.3

    Global current account balances.

  • <sup><xref ref-type="fig" rid="Rch10fig04">Figure 10.4</xref></sup>
    View in gallery
    Figure 10.4

    Exchange rate movements in emerging markets before and after the crisis.

  • <sup><xref ref-type="fig" rid="Rch10fig05">Figure 10.5</xref></sup>
    View in gallery
    Figure 10.5

    Exchange rate movements in China and Asian countries with floating currency regime

    (nominal).

  • <sup><xref ref-type="fig" rid="Rch10fig06">Figure 10.6</xref></sup>
    View in gallery
    Figure 10.6

    Exchange rate movements in China and Asian countries with floating currency regime

    (real effective).

Figure 8.1

Sum of absolute value of world current account balances

(ratio of world GDP).
Figure 8.2

Global imbalances, 1996–2008.
Figure 8.3

Saving and investment trends

(in percent of world GDP).
Figure 8.4

Saving and investment trends

(in percent of domestic GDP).
Figure 8.5

World capital flows, 1996–2008.
Figure 8.6

United States current account deficit and capital inflows

(ratio of GDP).
Figure 8.7

Current account projections

(in percent of world GDP).
Figure 8.8

Net foreign asset projections

(in percent of world GDP).
Figure 8.9

Real effective exchange rates, 1996–2009.
Figure 10.1

U.S. household wealth and disposable income.
Figure 10.2

Structure of China’s national savings.
Figure 10.3

Global current account balances.
Figure 10.4

Exchange rate movements in emerging markets before and after the crisis.
Figure 10.5

Exchange rate movements in China and Asian countries with floating currency regime

(nominal).
Figure 10.6

Exchange rate movements in China and Asian countries with floating currency regime

(real effective).