Global Imbalances and External Adjustment after the Crisis
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Summary:
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.
Series:
Working Paper No. 14/151
Subject:
Caribbean Cross country analysis Current account deficits Fiscal adjustment Foreign exchange Global imbalances Latin America
English
Publication Date:
August 12, 2014
ISBN/ISSN:
9781498339216/1018-5941
Stock No:
WPIEA2014151
Format:
Paper
Pages:
45
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