China and global rebalancing: A two-country approach

Agnès Benassy-Quere, Benjamin Carton () and Ludovic Gauvin
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Benjamin Carton: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique
Ludovic Gauvin: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, Centre de recherche de la Banque de France - Banque de France

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Based on simulations of an original DGE model of the US and the Chinese economies under various monetary regimes, we show that an overhaul of China's social safety net is capable of reducing global imbalances whatever the exchange-rate regime, provided international capital flows are allowed to react to expected return diff erentials, which requires some relaxation of capital controls. Exchange-rate flexibility would accelerate the rebalancing, but not make it larger. A monetary reform would fail to rebalance the economy unless the government simultaneously acts to curb NFA accumulation through consumption-enhancing reform or reducing its objective in terms of reserve accumulation.

Date: 2013-09
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Citations: View citations in EconPapers (8)

Published in China Economic Review, 2013, 26, pp.118-139. ⟨10.1016/j.chieco.2013.04.005⟩

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Related works:
Journal Article: China and global rebalancing: A two-country approach (2013)
Working Paper: China and global rebalancing: A two-country approach (2013)
Working Paper: China and global rebalancing: A two-country approach (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-00825239

DOI: 10.1016/j.chieco.2013.04.005

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