Global Imbalances and External Adjustment after the Crisis

Philip Lane and Gian Maria Milesi-Ferretti ()

No 2014/151, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; current account gap; Global crisis; Current account adjustment; current account balance; WEO current account projection; deficit country; gap term; Current account; Current account balance; Current account imbalances; Foreign assets; Global; Caribbean (search for similar items in EconPapers)
Pages: 45
Date: 2014-08-12
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Citations: View citations in EconPapers (27)

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Chapter: Global Imbalances and External Adjustment After the Crisis (2015)
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