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Exchange Rates and Global Rebalancing

Author

Listed:
  • Barry Eichengreen

    (Asian Development Bank Institute (ADBI))

  • Gisela Rua
Abstract
This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the response of imbalances and real exchange rates to shocks. Finally, it analyzes the characteristics of episodes in which chronic current account surpluses (as opposed to deficits) come to an end.

Suggested Citation

  • Barry Eichengreen & Gisela Rua, 2011. "Exchange Rates and Global Rebalancing," Macroeconomics Working Papers 23258, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:macroe:23258
    as

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    File URL: http://www.eaber.org/node/23258
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    References listed on IDEAS

    as
    1. Maria Milesi-Ferretti, Gian & Razin, Assaf, 1998. "Sharp reductions in current account deficits An empirical analysis," European Economic Review, Elsevier, vol. 42(3-5), pages 897-908, May.
    2. Leo De Haan & Hubert Schokker & Anastassia Tcherneva, 2008. "What Do Current Account Reversals in OECD Countries Tell Us About the US Case?," The World Economy, Wiley Blackwell, vol. 31(2), pages 286-311, February.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Denis V. Kadochnikov, 2013. "Gustav Cassel's purchasing power parity doctrine in the context of his views on international economic policy coordination," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 20(6), pages 1101-1121, December.
    2. Philip Levy, 2011. "The United States and the PRC : Macroeconomic Imbalances and Economic Diplomacy," Macroeconomics Working Papers 23208, East Asian Bureau of Economic Research.
    3. Philip I. Levy, 2011. "The United States and China: macroeconomic imbalances and economic diplomacy," AEI Economics Working Papers 49156, American Enterprise Institute.

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    More about this item

    Keywords

    exchange rates; Global rebalancing; Obstfeld-Rogoff model; chronic current account surpluses;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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