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    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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    Citable URI
    http://hdl.handle.net/11540/8355
    Metadata
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    working-paper-119_lopsided-global-economy_triggs.pdf (1.228Mb)
    Author
    Triggs, Adam
    Theme
    Economics
    Governance
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise