Global rebalancing in a three-country model
Engler, Philipp ;  ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleGlobal rebalancing in a three-country model
AuthorEngler, Philipp
EditorUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages27 S.
Series ; 2009,1 : Volkswirtschaftliche Reihe
KeywordsGlobal imbalances, US current account deficit, dollar adjustment, sectoral adjustment
Classification (DDC)330 Economics
AbstractThis paper extends the model of Engler et al. (2007) on the adjustment
of the US current account to a three-country world economy. This
allows an analysis of the differential impact of a reversal of the US current
account on Europe and Asia. In particular, the outcomes under different
exchange rate policies are analysed. The main finding is that large
factor re-allocations from non-tradables to tradables will be necessary in
the US. The direction of factor re-allocation in Asia depends on whether
the "Bretton-Woods-II" regime of unilaterally fixed or manipulated exchange
rates in Asia is continued. If this is the case, the tradables sector
and the current account surplus will continue to grow even when the US
deficit closes. The flip side of this result is that Europe will face a huge
real appreciation and an enormous current account deficit. With floating
exchange rates worldwide, the impact on Europe will be limited while
Asia┬┤s tradables sector will shrink
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Lehrstuhl für Geldtheorie und Geldpolitik
Year of publication2009
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2009-07-08 : 11:48:46
Last changed2016-01-05 : 02:38:15
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000002508