Title: A Framework for Assessing Global Imbalances1
Abstract: The World EconomyVolume 33, Issue 9 p. 1140-1174 A Framework for Assessing Global Imbalances† Thierry Bracke, Thierry Bracke European Central Bank, Frankfurt am Main, GermanySearch for more papers by this authorMatthieu Bussière, Matthieu Bussière European Central Bank, Frankfurt am Main, GermanySearch for more papers by this authorMichael Fidora, Michael Fidora European Central Bank, Frankfurt am Main, GermanySearch for more papers by this authorRoland Straub, Roland Straub European Central Bank, Frankfurt am Main, GermanySearch for more papers by this author Thierry Bracke, Thierry Bracke European Central Bank, Frankfurt am Main, GermanySearch for more papers by this authorMatthieu Bussière, Matthieu Bussière European Central Bank, Frankfurt am Main, GermanySearch for more papers by this authorMichael Fidora, Michael Fidora European Central Bank, Frankfurt am Main, GermanySearch for more papers by this authorRoland Straub, Roland Straub European Central Bank, Frankfurt am Main, GermanySearch for more papers by this author First published: 06 September 2010 https://doi.org/10.1111/j.1467-9701.2010.01266.xCitations: 18 † The authors are grateful to two anonymous referees as well as Anton Brender, Menzie Chinn, Luca Dedola, Marcel Fratzscher, Gerard Korteweg, Frank Moss, Lasse Nordquist, Fabrizio Perri, Georges Pineau, Florence Pisani, Jean Pisani-Ferry, Christian Thimann and Frank Warnock for useful discussion and comments. The views expressed in this paper are those of the authors and do not necessarily reflect those of the European Central Bank. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Abstract Since the mid-1990s and prior to the financial crisis external balances of systemically important economies widened significantly. This paper takes a long-run perspective and reviews the main determinants of widening global imbalances. To this aim, we first provide a set of newly derived statistical measures: while large external imbalances are not new in economic history, their persistence, their concentration on one economy (the United States) and the specific role of emerging market economies make the present episode rather unique. Second, we argue that the observed pattern of imbalances can be mostly understood as a result of various structural changes in the global economy, which have allowed a widening trend of external positions. Three main features set the most recent period apart from past episodes of growing external imbalances: (i) the emergence of new players, in particular emerging market economies such as China and India, which are quickly catching up with the advanced economies; (ii) an unprecedented wave of financial globalisation, with more integrated global financial markets and increasing opportunities for international portfolio diversification, also characterised by considerable asymmetries in the level of market completeness across countries; and (iii) the favourable global macroeconomic and financial environment, with record high global growth rates in recent years, low financial market volatility and easy global financing conditions over a long period of time, running until the outburst of the financial crisis during the summer of 2007. 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