Evidence on Financial Globalization and Crises: Global Imbalances

Abstract

The author defines global imbalances and discusses explanations for the development of large current account deficits and surpluses in key economies after 1997. He includes the saving-investment approach, the intertemporal approach, mercantilism and the Bretton Woods II hypothesis, and the global saving glut view. A discussion of the literature linking the financial crisis of 2008-09 to the development of global imbalances concludes.