Global Imbalances, the International Crisis and the Role of the Dollar

Riccardo Fiorentini

No 18/2011, Working Papers from University of Verona, Department of Economics

Abstract: The paper investigates the links between international global imbalances and the recent international financial crisis. It also focuses on the asymmetries of the dollar standard exchange rate regime. Global imbalances preceded the crisis but were one of the ingredients that led to the financial crash of 2007-2008. The paper rejects the ‘saving glut' explanation of the US trade deficit and shows that the key role of the dollar in the international monetary system allows the USA to exert seignorage in the international economy and created a circuit where Asian and oil-producing countries financed the US deficit. The inflow of foreign capitals increased the US domestic credit supply contributing to the development of the sub-prime bubble. The paper concludes that only the creation of a supranational monetary authority can eliminate the dangers of the asymmetric dollar standard regime.

Keywords: Imbalances; crisis; dollaer (search for similar items in EconPapers)
JEL-codes: E21 F33 (search for similar items in EconPapers)
Pages: 31
Date: 2011-12
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon, nep-opm and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://dse.univr.it//workingpapers/Imbalances_crisis_dollar.pdf First version (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ver:wpaper:18/2011

Access Statistics for this paper

More papers in Working Papers from University of Verona, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Michael Reiter ().