The theory of global imbalances: mainstream economics vs. structural Keynesianism

Thomas Palley

No 136-2014, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Prior to the 2008 financial crisis there was much debate about global trade imbalances. Prima facie, the imbalances seem a significant problem. However, acknowledging that would question mainstream economics' celebratory stance toward globalization. That tension prompted an array of explanations which explained the imbalances while retaining the claim that globalization is socially beneficial. This paper surveys those new theories. It contrasts them with the structural Keynesian explanation that views the imbalances as an inevitable consequence of neoliberal globalization. The paper also describes how globalization created a political economy that supported the system despite its proclivity to generate trade imbalances.

Keywords: global imbalances; saving glut; new Bretton Woods; asset shortage; structural Keynesianism (search for similar items in EconPapers)
JEL-codes: F02 F32 F33 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014
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Journal Article: The theory of global imbalances: mainstream economics vs structural Keynesianism (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:imk:wpaper:136-2014

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