Contemporary Developments of Global Imbalances

Abstract

This paper analyzes the contemporary developments of global imbalances. At the beginning of the analysis global imbalances are explained as a macroeconomic phenomenon. Further on the paper explains the key determinants of imbalances – the factors that stand behind the accumulations of surpluses or deficits. Furthermore the development of the problem in the period 1996-2011 is considered, and several sub-periods are differentiated. The emphasis is put on the post-crisis developments, i.e. the correction in imbalances after 2008, the reasons for the correction, the remaining distortions and the necessary policy measures that yet need to be taken. The paper concludes that despite the correction and the healthy adjustment there are still problems that need to be addressed so that the built-up of serious imbalances in the future is prevented