Prospects For Global Current Account Rebalancing

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The authors use the Bank of Canada's version of the Global Economy Model, a multi-country, multi-sector dynamic stochastic general-equilibrium model with an active banking system (the BoC-GEM-FIN), to study the evolution of global current account balances following the recent global financial crisis. More specifically, they use several shocks from the model to generate a simulated baseline scenario that mimics: the initial, pre-crisis state of disequilibrium in global current account balances, and the effects of the crisis, including those of the policy responses undertaken worldwide.