Rebalancing the Global Economy: A Primer for Policymaking (VoxEU Publications)

Such was the concern about the adverse consequences for the world economy of "imbalances" that G-20 Leaders, meeting in Pittsburgh in September 2009, adopted a Framework for Strong, Sustainable, and Balanced Growth. This step followed a growing body of expert opinion that took the view that large, persistent current account imbalances in the major industrialised economies and emerging markets since 2000 had, at the very least, contributed to the global financial crisis witnessed in 2007-8 and to the subsequent Great Recession. 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? This volume will be of interest to policymakers, their advisers, senior officials, as well as to anyone interested in the matter of limiting global economic imbalances. 1. Editors Overview / Stijn Claessens, Simon Evenett and Bernard Hoekman PART 1: How large are contemporary current account imbalances? Why do they persist? 2. Adjustment in global imbalances and the future of trade growth / Caroline Freund 3. On the causes of global imbalances and their persistence: Myths, facts and conjectures / Joshua Aizenman 4. Rebalancing in East Asia / Linda Y.C. Lim PART 2: What are the systemic costs of imbalances? 5. The costs of global imbalances / Richard Portes 6. External imbalances: Costs and consequences of unsustainable trajectories / Catherine L. Mann 7. International imbalances balance risk / Michael Dooley and Peter Garber PART 3: What are the lessons from previous attempts to rebalance the global economy? 8. The history of tackling current account imbalances / Harold James 9. Surplus reversals in large nations: The cases of France and Great Britain in the interwar period / Christopher M. Meissner PART 4: What would rebalancing entail? Which policies must change? Is collective action needed? 10. Does the rise of the BRICs and the credit crisis make it easier to rebalance the world economy? Yes! / Jim O'Neill 11. Exchange rates to support global rebalancing / John Williamson and William R. Cline 12. Why exchange rate changes will not correct global trade imbalances / Ronald I. McKinnon 13. This time will be different? Addressing the unsound post-crisis drivers of global imbalances / Kati Suominen 14. Asia's role in global rebalancing / Jong-Wha Lee 15. Prospects for rebalancing growth in East Asia / Yung Chul Park 16. Global rebalancing: An Indian perspective / Suman Bery 17. Rebalancing the global economy: A view from the BRICs / Ilan Goldfajn 18. Rebalancing the Eurozone and national competitiveness / Filippo di Mauro and Katrin Forster 19. A commercial policy package for rebalancing the global economy? / Przemyslaw Kowalski and Molly Lesher 20. Rebalancing will require supply side policy changes, but pitfalls abound / Vinod K. Aggarwal and Simon Evenett PART 5: The political viability of rebalancing 21. The political economy of rebalancing / Jeffry A Frieden 22. China-US imbalances and Europe's fiscal crisis: Plus ça change? / Geoffrey Garrett PART 6: Are new system-wide accords needed to promote rebalancing or to discourage persistent imbalances? 23. Global governance: Pre and post crisis / Mohamed A El-Erian and Michael Spence 24. Keynes, global imbalances, and international monetary reform, today / Vijay Joshi and Robert Skidelsky 25. Rebalancing: A lesson from the 1940s / Ann Capling 26. Persistent global imbalances / Anne O Krueger 27. International financial safety nets and global imbalances / Olivier Jeanne 28. Managing global imbalances: Is it time to consider some form of sanctions? / Heribert Dieter and Richard Higgott. Provides a comprehensive analysis of the central facets of the challenge of global economic imbalances that were a contributing factor to the recent global financial crisis. Identifies and evaluates potential national and systemic responses to this challenge, and shows the connections between the national, regional, and multilateral levels