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Global imbalances and "excess liquidity": is there a link?

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  • Luca Dedola

Abstract

Concerns about the sustainability of the current macroeconomic imbalances at the global level have dominated international policy debates. This article discusses a popular hypothesis linking global imbalances to the alleged presence of “excess liquidity” in international financial markets. It argues that while this hypothesis seems consistent with several aspects of current global imbalances, like the concurrence of low interest rates, asset price inflation and a high demand for US assets, especially as official reserves, it faces the challenge of accounting for the Asian savings surplus. JEL Classification: E5

Suggested Citation

  • Luca Dedola, 2006. "Global imbalances and "excess liquidity": is there a link?," Research Bulletin, European Central Bank, vol. 4, pages 5-7.
    • Handle: RePEc:ecb:ecbrbu:2006:0004:2
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    Cited by:

    1. Lucas Papademos, 2007. "The Effects of Globalization on Inflation, Liquidity and Monetary Policy," NBER Chapters, in: International Dimensions of Monetary Policy, pages 593-608, National Bureau of Economic Research, Inc.
    2. Goknur Umutlu & Yilmaz Yildız, 2011. "The Effect of Global Liquidity on Macroeconomic Parameters," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 167181-1671, September.

    More about this item

    Keywords

    global imbalances;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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