Cédric Tille, 11 October 2008

There has been a lively debate over the sustainability of global imbalances in recent years. This column argues that capital gains on international assets and liabilities are an important ingredient in any assessment of the sustainability of global imbalances.

Maurice Obstfeld, Jay Shambaugh , Alan M. Taylor, 11 October 2008

Developing country central banks’ unprecedented accumulation of foreign reserves lies at the heart of global imbalances, but the trend has puzzled international macroeconomists. This column explains the great accumulation as a response to the dangers of financial instability.

Harald Hau, Hélène Rey, 01 September 2008

The sustainability of the US current account depends on foreigners’ willingness to holding US assets. This column discusses new micro-econometric evidence that equity funds rebalance in reaction to increased exchange rate risk. In short, there is a limit to foreigners’ holding of US assets; the US will either have to run a trade surplus in the future, or the dollar must fall to deflate the value of foreigner’s holdings.

Robert Dekle, Jonathan Eaton, Samuel Kortum, 27 August 2008

A correction of international imbalances seems inevitable. What will that entail? This column presents estimates of the changes in trade flows required to rebalance the world’s current accounts and analyses which countries will bear the burdens of adjustment.

Steven Kamin, 26 August 2008

It has become conventional wisdom that international investors’ unusual fondness for US assets helps explain the persistence of the US current account deficit. This column argues that US financial assets have not been demonstrably more attractive than those of other industrial economies.

William Cline, John Williamson, 07 August 2008

Has the dollar fallen far enough? How large are unsustainable international imbalances? This column presents new estimates of fundamental equilibrium exchange rates, concluding that the US dollar has fallen enough with respect to the euro and pound but is overvalued against Asian currencies.


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