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Global imbalances in the XIX, XX and the XXI centuries

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  • Eugeni, Sara

Abstract

We establish a new stylized fact: while the current account and the trade balances are positively correlated during the second globalization (1990s–2010s), they were negatively correlated during the first globalization (1870s–1910s). We show that the reason behind is that the world interest rate is currently low relatively to the world growth rate due to a “global saving glut”, while this was not the case during the first globalization.

Suggested Citation

  • Eugeni, Sara, 2016. "Global imbalances in the XIX, XX and the XXI centuries," Economics Letters, Elsevier, vol. 145(C), pages 69-72.
    • Handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:69-72
    DOI: 10.1016/j.econlet.2016.05.018
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    References listed on IDEAS

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    1. Buiter, Willem H, 1981. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 769-797, August.
    2. Eugeni, Sara, 2015. "An OLG model of global imbalances," Journal of International Economics, Elsevier, vol. 95(1), pages 83-97.
    3. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1255-1310.
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    5. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, vol. 73(2), pages 223-250, November.
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    8. Obstfeld,Maurice & Taylor,Alan M., 2005. "Global Capital Markets," Cambridge Books, Cambridge University Press, number 9780521671798, September.
    9. Ben S. Bernanke, 2005. "The global saving glut and the U.S. current account deficit," Speech 77, Board of Governors of the Federal Reserve System (U.S.).
    10. Lane, Philip & Milesi-Ferretti, Gian Maria, "undated". "External Wealth of Nations," Instructional Stata datasets for econometrics extwealth, Boston College Department of Economics.
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    Cited by:

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    2. Esteves, Rui & Eichengreen, Barry, 2019. "The Trials of the Trilemma: International Finance 1870-2017," CEPR Discussion Papers 13465, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Trade imbalances; First globalization; Global saving glut; Dynamic inefficiency; OLG models;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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