Global Imbalances: The Role of Emerging Asia
IMF Working Papers, March 1, 2009
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Bibliographic details
- Authors: Massimiliano Pisani, Pietro Cova, Alessandro Rebucci
- Published: March 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451872118.001
Summary and Main Findings
- This paper investigates the role played by emerging Asia in the emergence and evolution of the global trade imbalances.
- Based on simulations in a general equilibrium model of the world economy:
- A productivity slowdown in the non-tradable sector of these economies in the second half of the 1990s fits regional macroeconomic developments relatively well, but has limited spillover effect to the United States trade balance.
- An increase in the desired level of emerging Asia net foreign assets starting in 2001 not only fits regional developments relatively well, but also has a significant spillover effect to the United States.
Methods and Analytical Approach
- Uses simulations in a general equilibrium model of the world economy to evaluate:
- Sectoral productivity changes (non-tradable sector) in emerging Asia.
- Changes in the desired level of emerging Asia net foreign assets beginning in 2001.
- Focus is on linkage between regional macroeconomic developments in emerging Asia and spillover effects to the United States trade balance.
Policy-Relevant Implications (as derived from findings)
- Sector-specific productivity slowdowns in emerging Asia (non-tradable sector, second half of the 1990s) are likely to have limited direct impact on the United States trade balance.
- Shifts in desired net foreign asset positions in emerging Asia (notably starting in 2001) can have significant spillover effects on the United States, suggesting that international asset position preferences in emerging markets matter for global imbalances.