Big Data

Was The Worldwide Asymmetry In Current Accounts Caused By The Macroeconomic Policy Of The Global Economy's Leader?

Date Added: Jun 2011
Format: PDF

Some authors sketch the causal chain that produced the current account surplus in China and the current account deficit of the US (as a part of global imbalances) as follows: declining interest rates in the US cause a redirection of capital flows into the periphery, rising capital inflows into China and other Asian countries trigger currency purchases by periphery central banks, and increasing stocks of foreign reserves on the asset side in the central bank balance sheet are matched by a proportional increase of reserve money on the liability side.