7931. Global Imbalances: Time for Action
- Author:
- William R. Cline, John Williamson, Yung Chul Park, Alan J. Ahearne, Kyung Tae Lee, and Jean Pisani-Ferry
- Publication Date:
- 03-2007
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- One of the principal dangers currently facing the world economy arises from the large and unsustainable imbalances in current account positions. Some observers argue that these imbalances will unwind gradually and nondisruptively, while others emphasize the risks of a sudden change of sentiment in financial markets that could result in an abrupt and damaging adjustment. No one knows which scenario will materialize, but a priori for policymakers should be to reduce the risks of a crisis, which could produce a world recession and disruptions to the global trading system. For that, the global economy requires official sponsorship of a credible, comprehensive adjustment program. This policy brief outlines such a program.
- Topic:
- Development, Economics, Globalization, and International Trade and Finance