Sengupta, Rajeswari and Aizenman, Joshua (2010): Global imbalances: Is Germany the new China? A skeptical view.
Download (341kB) | Preview
In this paper we evaluate the current account patterns of China and Germany. We point out that China's current account surplus as a share of global GDP in recent years resembles that of Germany’s. Yet, an important difference is that the Euro block’s current account inclusive of Germany, has overall been balanced, whereas emerging Asia's current account inclusive of China, has mostly been characterized by sizable surpluses. We further find that both China and Germany's current account surpluses seem to be accounted for by common factors. However we have reasons to doubt the long run viability of these current account trends in future decades. Demographic transitions in China and Germany are projected to reduce their surpluses, and this effect is stronger for Germany. We also discuss plausible reasons to doubt the extent to which the Euro block will move towards significant surplus in the coming years.
|Item Type:||MPRA Paper|
|Original Title:||Global imbalances: Is Germany the new China? A skeptical view|
|Keywords:||current accounts, demographic transitions, global imbalances|
|Subjects:||F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F3 - International Finance > F32 - Current Account Adjustment; Short-Term Capital Movements
|Depositing User:||Rajeswari Sengupta|
|Date Deposited:||03. Oct 2010 00:49|
|Last Modified:||15. Feb 2013 21:39|
Aizenman, J. and Y. Sun (2010). “Globalization and the Sustainability of Large Current Account Imbalances: Size Matters,” Journal of Macroeconomics, 32, 1: 35-44.
Chinn D. M. and E. S. Prasad (2003). “Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration.” Journal of International Economics, 59, 1: 47-76.
Dooley, M. P., D. Folkerts-Landau and P. Garber (2003), “An Essay on the Revived Bretton Woods System,” NBER Working Paper no. 9971.
Feenstra C. R. and C. Hong (2010). “Chinese Exports and Employment,” Chapter 5 in China’s Growing Role in World Trade, Feenstra C. R. and S. J. Wei (eds), University of Chicago, Chicago.
Glick, R. and K. J. Lansing (2009). "U.S. Household Deleveraging and Future Consumption Growth." FRBSF Economic Letter 2009-16.
Gruber J. W. and S. B. Kamin (2007)“Explaining the global pattern of current account imbalances” Journal of International Money and Finance 26, 4: 500-522