Global Imbalances in International Trade, Dynamics of Debt and Finance: Causes and Mitigation Measures

Tetiana Unkovska and Sergei Konoplyov

No 252, Growth Lab Working Papers from Harvard's Growth Lab

Abstract: Global imbalances have been building up in the world economy for decades and have reached critical levels, giving rise to tariff confrontations, trade wars, and geopolitical tensions. This paper presents our systemic analysis of three global imbalances: international trade, debt dynamics, and finance. Based on our new systemic concept of global imbalances and analysis of a large body of historical and latest financial and economic data in various countries and the world economy, we have concluded that these three global imbalances are closely interconnected and mutually influence each other through different channels and nonlinear feedback mechanisms that we describe. These three global imbalances are interrelated symptoms of deep structural problems in the global economy that require corrective measures both at the level of individual countries, especially the US and China, and at the global coordinated efforts by key countries within the G7 and G20. We highlight the key structural problems in the global economy, suggest a modern interpretation of the Triffin dilemma through the prism of equilibrium levels of exchange rates, and suggest possible measures to mitigate the global imbalances.

Keywords: Trade; Foreign Direct Investment (search for similar items in EconPapers)
Date: 2025-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://growthlab.hks.harvard.edu/sites/projects.i ... lobal-imbalances.pdf (application/pdf)

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:glh:wpfacu:252

Access Statistics for this paper

More papers in Growth Lab Working Papers from Harvard's Growth Lab
Bibliographic data for series maintained by Chuck McKenney ().