Global imbalances and the paradox of thrift [electronic resource] / W. Max Corden
- Bib ID:
- 5664075
- Format:
- Book
- Author:
- Corden, W. M. (Warner Max), 1927-
- Online Access:
- Archived at ANL
- Related Online Resources:
- Publisher site
- Description:
- [Parkville, Vic.] : Melbourne Institute of Applied Economic and Social Research, University of Melbourne, 2011
- ISBN:
- 9780734042521
- Series:
-
- Melbourne Institute working paper (Online) ; no. 11/20. 1447-5863.
- PANDORA electronic collection.
- Technical Details:
-
- Mode of access: Internet via the World Wide Web. Address as at 05/09/2011: http://www.melbourneinstitute.com/downloads/working_paper_series/wp2011n20.pdf.
- System requirements: Adobe Acrobat reader to read pdf file.
- Summary:
-
Global imbalances refer to current account surpluses and deficits. This is a form of international intertemporal trade, and the neoclassical approach suggests that there are gains from trade, and hence there may be no problem created by global imbalances. This paper presents qualifications to this argument. A crucial concept is the "return journey", namely the need for borrowers to pay interest (or dividends) and eventually to be able to repay. Thus savings must lead to investment, which provides the future resources to enable the return journey. If borrowing is used to finance current consumption, wars, or unwise ("unfruitful") investment, such as excessive housing construction, the result will be a crisis. In this way the high net savings of some countries actually led to the recent crisis. This is a new version of Keynes? "paradox of thrift" The central issue on which this paper focuses is the failure of high net savings by the "savings glut" countries to lead to fruitful investment in other countries, both in the United States and in developing countries. Hence a crisis was caused by the lack of provision for the return journey.
- Notes:
-
- "July 2011".
- Title from title screen (viewed on September 5, 2011)
- Includes bibliographical references (p. 22)
- Text.
- Also available in a print version.
- Selected for archiving
- Subject:
- Other authors/contributors:
- Melbourne Institute of Applied Economic and Social Research
- Copyright:
-
In Copyright
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Copyright status was determined using the following information:
- Material type:
- Literary Dramatic Musical
- Published status:
- Published
- Publication date:
- 2011
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