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The theory of global imbalances: mainstream economics vs structural Keynesianism

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  • Thomas I. Palley

    (AFL-CIO, Washington, DC, USA)

Abstract

Prior to the 2008 financial crisis there was much debate about global trade imbalances. Prima facie, the imbalances seem a significant problem. However, acknowledging that would question mainstream economics' celebratory stance toward globalization. That tension prompted an array of theories which explained the imbalances while retaining the claim that globalization is economically beneficial. This paper surveys those new theories. It contrasts them with the structural Keynesian explanation that views the imbalances as an inevitable consequence of neoliberal globalization. The paper also describes how globalization created a political economy that supported the system despite its proclivity to generate trade imbalances.

Suggested Citation

  • Thomas I. Palley, 2015. "The theory of global imbalances: mainstream economics vs structural Keynesianism," Review of Keynesian Economics, Edward Elgar Publishing, vol. 3(1), pages 45-62, January.
    • Handle: RePEc:elg:rokejn:v:3:y:2015:i:1:p45-62
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Protectionism for Liberals
      by Robert Skidelsky in Project Syndicate on 2018-08-14 10:20:17

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    Cited by:

    1. Keil, Sascha, 2024. "Competing for manufacturing value added: How strong is competitive cost pressure on sectoral level?," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 197-212.
    2. Ryan Woodgate, 2023. "Offshoring via vertical FDI in a long-run Kaleckian Model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 46(1), pages 32-64, January.
    3. Thomas I. Palley, 2016. "Zero Lower Bound (ZLB) Economics," IMK Working Paper 164-2016, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Keywords

    global imbalances; saving glut; new Bretton Woods; asset shortage; structural Keynesianism;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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