2004: Managing Exchange Rates: Achievement of Global Re-Balancing or Evidence of Global Co-Dependency?
How are exchange rates related to the US external accounts and macro policy management? There is no doubt that further depreciation of the dollar will be part of the package of policy moves and economic responses that will yield “global re-balancing.”1 This term implies the complementary narrowing of two imbalances around the world. One is the yawning US current account deficit, and the other is the widely geographically disbursed but nevertheless persistent dependence of the rest of the world on net exports to the United States. Underlying these external imbalances are internal imbalances in both countries and regions with respect to savings and investment and to domestic demand and production.
KeywordsCurrent Account Trade Balance Current Account Deficit Diffi Cult Current Account Balance
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