Capital inflows and booms in asset prices: Going beyond the current account

Eduardo Olaberría, 7 December 2013

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For decades, policymakers’ perception has been that large capital inflows can fuel booms in asset prices. If this were true, bonanzas in capital inflows would imply an important risk to financial stability, since booms in asset prices are leading indicators of financial crises.

Topics: Financial markets, International finance
Tags: asset prices, booms, bubbles, capital flows, Capital inflows, current account

China’s strong domestic demand has reduced its trade surplus

Françoise Lemoine, Deniz Ünal, 19 July 2012

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Between 2005 and 2007 China’s accumulated huge trade surpluses and played a major part in the rise of global imbalances. The US and China have repeatedly come in conflict over the imbalance in bilateral trade.

Topics: Global economy, International trade
Tags: China, current account, global imbalances

Sudden stops in the Eurozone

Jean Pisani-Ferry, Silvia Merler, 2 April 2012

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Many analysts and observers have put forward that the euro crisis is a balance-of-payments crisis at least as much as a fiscal crisis (e.g. Carney 2012, Giavazzi and Spaventa 2011, Sinn 2012, Wolf 2011).

Topics: EU policies
Tags: balance of payments, capital flows, current account, sudden stops

The global financial crisis – What caused the build-up?

Erlend W Nier, Ouarda Merrouche, 25 March 2012

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With all eyes currently on the latest twists being played out in the Eurozone, the global financial crisis, now in its fifth year, appears alive and well. But there is still little agreement on the underlying macroeconomic causes of the build-up of financial imbalances that unwound so dramatically since the summer of the 2007.

Topics: International finance, Macroeconomic policy
Tags: current account, global crisis, monetary policy

The growth effect of current-account reversals

Luiz de Mello, Pier Carlo Padoan, Linda Rousová, 18 June 2011

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Current-account reversals are often disruptive to short-run growth, at least in developing and emerging-market economies (see on this site Abiad et al. 2010 and Böwer et al. 2010).

Topics: Development
Tags: current account, emerging economies, growth

Fiscal policy and the current account

S. M. Ali Abbas, Jacques Bouhga-Hagbe, Antonio Fatás, Paolo Mauro, Ricardo Cicchelli Velloso, 16 September 2010

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Today, as in the 1980s, government deficits and trade deficits are growing in tandem in some nations while government surpluses and trade surpluses are growing in others.

Topics: Global economy, Macroeconomic policy
Tags: current account, fiscal policy, imbalances

The $2 trillion dollar question: How about US demand and output?

Giancarlo Corsetti, Panagiotis Th. Konstantinou, 18 February 2009

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In a recent Vox column, Gian Maria Milesi-Ferretti estimated that the US current account deteriorated by 15% of GDP in 2008.

Topics: International finance
Tags: consumption, current account, temporary shocks, US net international investment position

Does exchange rate flexibility speed up current account adjustment?

Menzie D. Chinn , Shang-Jin Wei, 1 December 2008

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“We also agreed that an orderly unwinding of global imbalances, while sustaining global growth, is a shared responsibility involving... greater exchange rate flexibility...”
G20 Communiqué, Meeting of Finance Ministers and Central Bank Governors, Cape Town, South Africa, November 17-18, 2007.

 

Topics: Exchange rates
Tags: current account, exchange rate regime

How do capital gains affect long run-current accounts?

Cédric Tille, 11 October 2008

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The debate on the sustainability, or lack thereof, of global imbalances has kept policymakers and international economists busy for several years.

Topics: International finance
Tags: capital gains, current account, financial globalisation, international imbalances

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