The purpose of this electronic book is to provide policymakers and their advisers with up-to-date, comprehensive analyses of the central facets of global economic imbalances and to identify and evaluate potential national and systemic responses to this challenge. To break down the many facets of this collective economic challenge, leading experts were asked to address one of the following policy-relevant questions. 1. How large are contemporary current account imbalances? Why do they persist? 2. What are the systemic costs of imbalances? 3. What are the lessons from previous attempts to rebalance the global economy? 4. What would rebalancing entail? Which policies must change? Is collective action needed? 5. What is the political viability of proposals to rebalance national economies? 6. Are new system-wide accords needed to promote rebalancing or to discourage persistent imbalances? www.voxeu.org/reports/global_imbalances.pdf

How trade imbalances spurred on the global financial crisis and why we aren't out of trouble yet China's economic growth is sputtering, the Euro is under threat, and the United States is combating serious trade disadvantages. Another Great Depression? Not quite. Noted economist and China expert Michael Pettis argues instead that we are undergoing a critical rebalancing of the world economies. Debunking popular misconceptions, Pettis shows that severe trade imbalances spurred on the recent financial crisis and were the result of unfortunate policies that distorted the savings and consumption patterns of certain nations. Pettis examines the reasons behind these destabilizing policies, and he predicts severe economic dislocations that will have long-lasting effects. Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future.

This new eBook aims to provide policymakers and their advisers with up-to-date, comprehensive analyses of the central facets of global economic imbalances and to identify and evaluate potential national and systemic responses to this challenge.--Publisher description.

While global rebalancing will mainly involve structural realignment among major advanced and emerging market economies, it could have significant impact on low-income countries (LICs). Simulations using a global general equilibrium model show that a more balanced global economy would tend to improve the current account balance in LICs with limited impact on domestic output. However, there could be adverse terms of trade effects on some LICs as the prices of manufactured goods rise. On the other hand, such prices increases could provide an impetus to export diversification in many LICs, raising growth in the long run. The output and terms of trade effects would be significantly amplified if structural adjustment is impeded by factor immobility and other rigidities.

Reduction of large and persistent external imbalances is currently a key focus of G-20 discussions. The paper argues that in a progressively multipolar world economy, the goals of global rebalancing, growth, and development are increasingly inter-linked. Growth-oriented rebalancing calls for emphasizing structural reforms and leveraging the role of developing countries in supporting strong and balanced global growth.

This book examines imbalances in seven major economies: China, France, Germany, India, Japan, the United Kingdom, and the United States, evaluating key indicators agreed on by the G20 for identifying large imbalances, including public and private debt and private saving, and countries external position. The chapters describe a suite of corrective steps tailored for each country that, if implemented, could improve prospective economic outcomes, creating sustainable and balanced growth for these economies and serving as a model for other G20 countries.