Rebalancing a Lopsided Global Economy
Triggs, Adam | May 2018
Abstract
The growth in global current account imbalances has produced a lopsided global economy, characterised by large lenders and large borrowers, large savers and large consumers, and large exporters and large importers. For many years, the G-20 has committed to reducing these imbalances. But has it been successful? Are the G-20’s policy prescriptions for reducing these imbalances the right ones? And have countries altered their policies because of the discussions and commitments in the G-20 or not? The paper assesses whether the G-20 has achieved its goal of reducing global current account imbalances. It then uses the G-Cubed (G-20) model—a multi-country, multi-sector, intertemporal general equilibrium model—to assess the impacts of the G-20’s proposed policy agenda. It shows that the G-20’s policy prescriptions—reducing the fiscal deficit in the United States, increasing public infrastructure investment in Germany and increasing domestic consumption in China—are not necessarily effective in reducing current account imbalances and, when imbalances are reduced, it often comes at the cost of the real economy. Finally, the paper uses the results from in-depth interviews with 61 policymakers from across all G-20 countries—including Janet Yellen, Kevin Rudd, Ben Bernanke, Haruhiko Kuroda, Jack Lew, Mark Carney, and 55 others—to explore whether the G-20’s focus on current account imbalances influences domestic policies. It finds that while the G-20’s influence has been marginal, there are ways in which it could be strengthened. The paper concludes with a discussion on how the G-20’s agenda could be reformed to help reduce current account imbalances in the future.
Citation
Triggs, Adam. 2018. Rebalancing a Lopsided Global Economy. © Brookings India. http://hdl.handle.net/11540/8355.Keywords
Development Economics
Regional Economic Development
Economic Impact
Asian Development Bank
Development
Economic Boom
Regional Economic Integration
Good Governance
Governance Approach
Macroeconomic
Macroeconomic Analysis
Macroeconomic Framework
Macroeconomic Models
Macroeconomic Performance
Macroeconomic Planning
Macroeconomic Policies
Macroeconomic Reform
Macroeconomic Stabilization
Economic planning
Economic structure
Growth policy
Trade relations
Trade policy
Trade policy
Economic development
Economies in transition
International economy
Border integration
Economic integration
Gross domestic product
Trade policy
Institutional Framework
Public Administration
Business Ethics
Regional economics
Economic forecasting
Economic development projects
Success in business
Business
Free trade
Business
Economics
Communication in economic development
Restraint of trade
International economic integration
Trade blocs
East-West trade
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