Global Rebalancing: Implications for Low-Income Countries

October 1, 2011

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Format: Chicago

Yongzheng Yang. Global Rebalancing: Implications for Low-Income Countries, (USA: International Monetary Fund, 2011) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

While global rebalancing will mainly involve structural realignment among major advanced and emerging market economies, it could have significant impact on low-income countries (LICs). Simulations using a global general equilibrium model show that a more balanced global economy would tend to improve the current account balance in LICs with limited impact on domestic output. However, there could be adverse terms of trade effects on some LICs as the prices of manufactured goods rise. On the other hand, such prices increases could provide an impetus to export diversification in many LICs, raising growth in the long run. The output and terms of trade effects would be significantly amplified if structural adjustment is impeded by factor immobility and other rigidities.

Subject: Commodities, Exports, Foreign exchange, International trade, Real exchange rates, Terms of trade, Trade balance

Keywords: Africa, Asia and Pacific, Central Asia, Commodity exporter, Current account, Europe, Export expansion, Exports, Global, Global Rebalancing, LIC economy, LIC export, LIC group, LIC region, Low-income countries, Real exchange rates, Terms of trade, Trade balance, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/239
Stock No:

WPIEA2011239
ISBN:

9781463922610
ISSN:

1018-5941

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