Macroeconomic perspective on global imbalances.

The recent global financial crisis has been described as the abrupt unwinding of the macroeconomic imbalances that have emerged over the last decade. The global imbalances, with rising current account deficits in the United States and massive surpluses in Asia and oil-exporting countries, have been...

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Main Authors: Lee, Pei Hua., Su, Zhixiang., Teoh, Shi Ying.
Other Authors: Tan Kim Heng
Format: Final Year Project
Language:English
Published: 2010
Subjects:
Online Access:http://hdl.handle.net/10356/38619
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-386192019-12-10T10:47:59Z Macroeconomic perspective on global imbalances. Lee, Pei Hua. Su, Zhixiang. Teoh, Shi Ying. Tan Kim Heng School of Humanities and Social Sciences DRNTU::Social sciences::Economic theory::Macroeconomics The recent global financial crisis has been described as the abrupt unwinding of the macroeconomic imbalances that have emerged over the last decade. The global imbalances, with rising current account deficits in the United States and massive surpluses in Asia and oil-exporting countries, have been viewed as a threat to global economic and financial stability. This paper outlines the economic forces behind the global imbalances, and focuses on the theoretical approaches to the current account and their implications on the external and internal adjustment process. Using an autoregressive distributed-lag model within an error correction framework, this paper investigates the fundamental causes and proximate determinants of the US current account. Econometric results show that in the long run, the US current account position is negatively correlated with the real exchange rate and domestic GDP, and positively correlated with world GDP, as postulated by the elasticity approach. In addition, US household savings are shown to contribute significantly to the deficit, while corporate savings and government budget balance do not. Overall, the empirical results substantiate our argument that both internal and external adjustments are required to rebalance the global economy, starting with closing the US external deficit. Bachelor of Arts 2010-05-13T08:22:54Z 2010-05-13T08:22:54Z 2010 2010 Final Year Project (FYP) http://hdl.handle.net/10356/38619 en Nanyang Technological University 53 p. application/pdf
institution Nanyang Technological University
building NTU Library
country Singapore
collection DR-NTU
language English
topic DRNTU::Social sciences::Economic theory::Macroeconomics
spellingShingle DRNTU::Social sciences::Economic theory::Macroeconomics
Lee, Pei Hua.
Su, Zhixiang.
Teoh, Shi Ying.
Macroeconomic perspective on global imbalances.
description The recent global financial crisis has been described as the abrupt unwinding of the macroeconomic imbalances that have emerged over the last decade. The global imbalances, with rising current account deficits in the United States and massive surpluses in Asia and oil-exporting countries, have been viewed as a threat to global economic and financial stability. This paper outlines the economic forces behind the global imbalances, and focuses on the theoretical approaches to the current account and their implications on the external and internal adjustment process. Using an autoregressive distributed-lag model within an error correction framework, this paper investigates the fundamental causes and proximate determinants of the US current account. Econometric results show that in the long run, the US current account position is negatively correlated with the real exchange rate and domestic GDP, and positively correlated with world GDP, as postulated by the elasticity approach. In addition, US household savings are shown to contribute significantly to the deficit, while corporate savings and government budget balance do not. Overall, the empirical results substantiate our argument that both internal and external adjustments are required to rebalance the global economy, starting with closing the US external deficit.
author2 Tan Kim Heng
author_facet Tan Kim Heng
Lee, Pei Hua.
Su, Zhixiang.
Teoh, Shi Ying.
format Final Year Project
author Lee, Pei Hua.
Su, Zhixiang.
Teoh, Shi Ying.
author_sort Lee, Pei Hua.
title Macroeconomic perspective on global imbalances.
title_short Macroeconomic perspective on global imbalances.
title_full Macroeconomic perspective on global imbalances.
title_fullStr Macroeconomic perspective on global imbalances.
title_full_unstemmed Macroeconomic perspective on global imbalances.
title_sort macroeconomic perspective on global imbalances.
publishDate 2010
url http://hdl.handle.net/10356/38619
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