The Great Rebalancing

Trade, Conflict, and the Perilous Road Ahead for the World Economy

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Author: Michael Pettis

Publisher: Princeton University Press

ISBN: 1400852269

Category: Business & Economics

Page: 256

View: 5388

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.

The Great Rebalancing Act

Can Investment Be a Lever in Asia?

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Author: International Monetary Fund

Publisher: International Monetary Fund

ISBN: 1455217832

Category: Business & Economics

Page: 28

View: 2912

Ensuring stable growth in the postcrisis world economy will require a rebalancing of economic activity in several countries. In Asia’s export-dependent economies, this entails relying more on private domestic demand as a driver of growth. While some countries need to raise consumption, several need to raise investment or reorient it from tradable to nontradable sectors. These changes in investment could be facilitated by financial reforms that enhance domestically oriented firms’ access to credit, stronger incentives for corporate restructuring, policies to bolster the business climate and reduce uncertainty, and by improvements in infrastructure that raise the returns to private investment.

The Challenge of Economic Rebalancing in Europe

Perspectives for CESEE Countries

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Author: Ewald Nowotny,Doris Ritzberger-Grünwald,Helene Schuberth

Publisher: Edward Elgar Publishing

ISBN: 1784719803

Category: Business & Economics

Page: 264

View: 9523

In the long aftermath of the acute global financial crisis of 2008/09, “rebalancing” the economy with new sources of growth and productivity remains a persistent necessity. This book addresses the resulting trade-offs and challenges. These needs, and the corresponding policy challenges, are especially prevalent in Europe, in particular Central, Eastern and South-Eastern Europe. On this issue, this book contributes lessons learned from earlier balance sheet recessions. It also addresses the often overlooked link between macroeconomic imbalances and economic inequality. Further contributions focus on the interaction between monetary policy and financial stability, adding a regional perspective to these important issues.

Still Ours to Lead

America, Rising Powers, and the Tension between Rivalry and Restraint

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Author: Bruce D. Jones

Publisher: Brookings Institution Press

ISBN: 0815725132

Category: Political Science

Page: 263

View: 2323

Is the United States still a "superpower"? How are the rising powers establishing themselves in international politics and security? What is the future of global stability? For over a decade, Bruce Jones has had a front-row seat as the emerging powers—principally China, India, and Brazil, but also Turkey, Indonesia, Korea, and others—thrust themselves onto the global stage. From Delhi to Doha to Beijing to Brasilia, he's met with the politicians, diplomats, business leaders, and scholars of those powers as they craft their strategies for rising influence—and with senior American officials as they forge their response. In Still Ours to Lead, Jones tells a nuanced story of American leadership. He artfully examines the tension between the impulse to rival the United States and the incentives for restraint and cooperation among the rising powers. That balance of rivalry and restraint provides the United States with a continued ability to solve problems and to manage crises at roughly the same rate as when American dominance was unquestioned. Maintaining the balance is central to the question of whether we will live in a stable or unstable system in the period to come. But it just so happens that this challenge plays to America's unique strength—its unparalleled ability to pull together broad and disparate coalitions for action. To succeed, America must adapt its leadership to new realities.

The Death of Money

The Coming Collapse of the International Monetary System

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Author: James Rickards

Publisher: Penguin

ISBN: 1101637242

Category: Business & Economics

Page: 384

View: 398

The next financial collapse will resemble nothing in history. . . . Deciding upon the best course to follow will require comprehending a minefield of risks, while poised at a crossroads, pondering the death of the dollar. The U.S. dollar has been the global reserve currency since the end of World War II. If the dollar fails, the entire international monetary system will fail with it. But optimists have always said, in essence, that confidence in the dollar will never truly be shaken, no matter how high our national debt or how dysfunctional our government. In the last few years, however, the risks have become too big to ignore. While Washington is gridlocked, our biggest rivals—China, Russia, and the oil-producing nations of the Middle East—are doing everything possible to end U.S. monetary hegemony. The potential results: Financial warfare. Deflation. Hyperinflation. Market collapse. Chaos. James Rickards, the acclaimed author of Currency Wars, shows why money itself is now at risk and what we can all do to protect ourselves. He explains the power of converting unreliable investments into real wealth: gold, land, fine art, and other long-term stores of value.

Bust

Greece, the Euro and the Sovereign Debt Crisis

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Author: Matthew Lynn

Publisher: John Wiley & Sons

ISBN: 9781119990680

Category: Business & Economics

Page: 288

View: 7437

In 2001, Greece saw its application for membership into the Eurozone accepted, and the country sat down to the greatest free lunch in economic history. However, the coming years of global economic prosperity would lead to unrestrained spending, cheap borrowing, and a failure to implement financial reform, leaving the country massively exposed to a financial crisis—which duly struck. In Bust: Greece, the Euro, and the Sovereign Debt Crisis, Bloomberg columnist Matthew Lynn explores Greece's spectacular rise and fall from grace and the global repercussions of its financial disaster. Page by page, he provides a thrilling account of the Greek financial crisis, drawing out its origins, how it escalated, and its implications for a fragile global economy. Along the way, Lynn looks at how the Greek contagion has spread like wildfire throughout Europe and explores how government ineptitude as well as financial speculators compounded the problem. Blending financial history, politics, and current affairs, Lynn skillfully tells the story of how one nation rode the wave of economic prosperity and brought a continent, a currency, and, potentially, the global financial system to its knees. Lively, engaging, and thought provoking, Bust reminds us just how interconnected the world really is.

The System Worked

How the World Stopped Another Great Depression

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Author: Daniel W. Drezner

Publisher: Oxford University Press

ISBN: 0199912122

Category: Political Science

Page: 280

View: 9972

International institutions, from the International Monetary Fund to the International Olympic Committee, are perceived as bastions of sclerotic mediocrity at best and outright corruption at worst, and this perception is generally not far off the mark. In the wake of the 2008 financial crash, Daniel W. Drezner, like so many others, looked at the smoking ruins of the global economy and wondered why global economic governance structure had failed so spectacularly, and what could be done to reform them in the future. But then a funny thing happened. As he surveyed their actions in the wake of the crash, he realized that the evidence pointed to the exact opposite conclusion: global economic governance had succeeded. In The System Worked, Drezner, a renowned political scientist and international relations expert, contends that despite the massive scale and reverberations of this latest crisis (larger, arguably, than those that precipitated the Great Depression), the global economy has bounced back remarkably well. Examining the major resuscitation efforts by the G-20 IMF, WTO, and other institutions, he shows that, thanks to the efforts of central bankers and other policymakers, the international response was sufficiently coordinated to prevent the crisis from becoming a full-fledged depression. Yet the narrative about the failure of multilateral economic institutions persists, both because the Great Recession affected powerful nations whose governments managed their own economies poorly, and because the most influential policy analysts who write the books and articles on the crisis hail from those nations. Nevertheless, Drezner argues, while it's true that the global economy is still fragile, these institutions survived the "stress test" of the financial crisis, and may have even become more resilient and valuable in the process. Bucking the conventional wisdom about the new "G-Zero World," Drezner rehabilitates the image of the much-maligned international institutions and demolishes some of the most dangerous myths about the financial crisis. The System Worked is a vital contribution to our understanding of an area where the stakes could not be higher.

Rebalancing China's Economy

What Does Growth Theory Tell Us?

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Author: Mr. Jahangir Aziz

Publisher: International Monetary Fund

ISBN: 1451910045

Category: Business & Economics

Page: 34

View: 7311

This paper uses the standard one-sector neoclassical growth model to investigate why China''s consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly distorted in the 1990s and 2000s. The distortion could have been caused by nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending. If China is to rebalance growth towards relying more on consumption and less on exports and investment, banking sector reforms and financial market development could, therefore, turn out to be key.

Rebalancing Economies in Financially Integrating East Asia

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Author: Jenny Corbett,Ying Xu

Publisher: Routledge

ISBN: 1317596455

Category: Business & Economics

Page: 270

View: 762

Since the Asian Financial Crisis (AFC) of 1997–98 large current account surpluses have accumulated in the countries of Asia and the Pacific with corresponding deficits elsewhere. The sharp plunge in global trade volumes during the global financial crisis has highlighted the need for ‘rebalancing’–focussing more on domestic sources of economic growth than on exports in some Asian economies. One key objective of the book is to elucidate the economic structures and policies that give rise to current account surpluses and imbalances and consider what policy adjustments could change them. Another objective is to show the link between financial systems, financial integration and the transmission of economic shocks between countries. The book offers new dimensions to understand ‘rebalancing’ and provides alternative and arguably more fundamental solutions to address imbalances. Rather than focusing on exchange rate misalignment, this book begins from the premise that the imbalances are a macroeconomic problem that reflects a mismatch between savings and investment in the surplus countries. Then, it examines exchange rate policies adopted by countries in the region and finds that part of the explanation for their currency strategy lies in their perceived need to build foreign exchange reserves to provide a buffer in case of instabilities. The book examines whether there are other possibilities for countries to insure against economic volatility by more actively and openly engaging with international capital markets. The studies show that closer financial integration, involving more open financial markets, with well-chosen partners, would be welfare-improving and should reduce the need for the counter-productive, self-insurance policies that result in foreign exchange accumulation.

Current Account Rebalancing and Real Exchange Rate Adjustment Between the U.S. and Emerging Asia

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Author: Damiano Sandri,Pau Rabanal,Isabelle Méjean

Publisher: International Monetary Fund

ISBN: 1455222011

Category: Business & Economics

Page: 29

View: 4809

A reduction in the U.S. current account deficit vis-à-vis emerging Asia involves a shift in demand from U.S. to emerging Asia tradable goods and a change in international relative prices. This paper quantifies the required adjustment in the terms of trade and real exchange rates in a three-country open economy model of the U.S., China, and other emerging Asia. We compare scenarios where both Chinese and other emerging Asian export prices change by the same proportion to the case where export prices remain constant in one country and increase in the other. Our results are robust to different assumptions about elasticities of substitution and to introducing a high degree of vertical fragmentation in production in the model.