The US External Imbalance and the Dollar: A Long-Term View

Philip Arestis and Elias Karakitsos

Chapter 10 in The Post ‘Great Recession’ US Economy, 2010, pp 239-272 from Palgrave Macmillan

Abstract: Abstract Throughout this book it has been argued repeatedly that the failure of current economic theory and policy to appreciate that asset-led cycles are different from the demand cycles of the 1950s and 1960s and the supply cycles of the 1970s and 1980s has made each of the last three cycles worse than the previous ones. This is clearly an unstable situation that gives rise to successive bubbles, each one being bigger than the previous one and each recession being worse than the one before. This instability is best reflected in increasing imbalances in various sectors. In this chapter we analyse the US external imbalance, which has widened in each of the last three cycles confirming the aforementioned instability, and its implications for the economy and the dollar.

Keywords: Nash Equilibrium; Foreign Direct Investment; Monetary Policy; Business Cycle; Central Bank (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1057/9780230276109_10

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