Journal Article

Global Imbalances: Past, Present, and Future

Marcello De Cecco

in Contributions to Political Economy

Volume 31, issue 1, pages 29-50
Published in print June 2012 | ISSN: 0277-5921
Published online April 2012 | e-ISSN: 1464-3588 | DOI: https://dx.doi.org/10.1093/cpe/bzs001
Global Imbalances: Past, Present, and Future

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  • Money and Interest Rates
  • International Economics
  • Macroeconomic Aspects of International Trade and Finance
  • International Finance

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The paper provides a historical and theoretical examination of the problem of global imbalances from classical antiquity to the present. It focuses on the classical Gold Standard, the interwar period and the post-1971 Dollar Standard. While there is neither theoretical proof nor factual evidence to show that global imbalances caused the present crisis, they were associated with crises of the past. The paper contrasts the dollar gap of the late 1940s—resolved by intelligent policies devised and implemented by the US government (which led to the reconstruction of Europe and to several decades of export-led growth)—with the zero-sum spirit of the present European policy. The paper rejects the ‘saving glut’ approach to global imbalances and suggests that reserve-building by Asian and other emerging economies may have helped to reduce the damage done by financial institutions in the advanced economies. It suggests that these non-liberalized, large financial systems may have acted to stabilize the structurally unbalanced markets of the advanced, liberalized economies.

Keywords: F01; F02; F30; F33; F36; F42; E42

Journal Article.  11438 words. 

Subjects: Money and Interest Rates ; International Economics ; Macroeconomic Aspects of International Trade and Finance ; International Finance

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