Global Current Account Imbalances and Exchange Rate Adjustments
By M. Obstfeld, Kenneth S. Rogoff. 2005
581 citations recorded by the source corpus.
We develop a three-region economic model to assess how a significant reduction in global current account imbalances might impact dollar, euro, and Asian real exchange rates under alternative scenarios. Sizable exchange rate shifts appear to be a necessary corollary of adjustment even under otherwise relatively benign scenarios where appropriate policy actions are taken (for example, to raise U.S. national saving or to make Asian exchange rates more flexible). Our baseline estimate suggests that a halving of the U.S. current account deficit would entail nearly a 20 percent appreciation of Asian real exchange rates versus the dollar and a slightly smaller rise in European currencies. Although an adverse scenario is not the most likely outcome, the risks appear to be significantly higher than they were five years ago.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/6a565815b68db0cdbdc0f3b859bc2ced35c5ba88
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Hélène Rey
- Philip R. Lane
- G. Zucman
- G. Milesi-Ferretti
- Marcel Fratzscher
- Robert N. McCauley
- P. Gourinchas
- Stefan Avdjiev
In Finance
- Hélène Rey
- Philip R. Lane
- G. Zucman
- G. Milesi-Ferretti
- P. Gourinchas
- Robert N. McCauley
- Marcel Fratzscher
- Stefan Avdjiev
Citations in the corpus
- Exorbitant privilege and exorbitant duty (2010, background): “See the discussion in Obstfeld and Rogoff (2005).”
- What Explains Global Exchange Rate Movements during the Financial Crisis (2009, background): “1 by Marcel Fratzscher 2 1 The paper is forthcoming in a special conference volume of the Journal of International Money and Finance on the financial crisis.”
- The "great moderation'' and the US external imbalance (2006, background): “This paper contributes to the recent literature which attempts to assess the sustainability and the evolution of the current US imbalances (see for example Backus et al. 2006 , Edwards, 2005 or Obstfeld and Rogoff, 2005).”
- A Global Perspective on External Positions (2005, background): “17 These authors generally build on the earlier portfolio-balance literature developed by Henderson and Rogoff (1982) and Kouri (1983), amongst others.”