The Influence of Global Imbalances on the Build-up of the Current Financial Crisis Cover Image

The Influence of Global Imbalances on the Build-up of the Current Financial Crisis
The Influence of Global Imbalances on the Build-up of the Current Financial Crisis

Author(s): Adam Twardosz
Subject(s): Economy
Published by: Wydawnictwo Uniwersytetu Ekonomicznego w Krakowie
Keywords: global imbalances; exorbitant privilege; post-Bretton Woods system; financial crisis; current account; exchange rates

Summary/Abstract: The issue of global imbalances already emerged in the pre-crisis era, albeit in a different context. Research was mostly concentrated on analysing how distortions in the external positions of the main countries would affect future turbulence on foreign exchange markets and in the real sector before reaching new equilibrium points. This article addresses the problem in a different manner by describing the causal link between monetary and fiscal expansion and the resulting increase in trade deficit. The process of reinvestment of foreign exchange reserves by surplus countries affects credit, stock and real estate markets, thus paving the way for future turmoil.

  • Issue Year: 2013
  • Issue No: 09
  • Page Range: 43-66
  • Page Count: 24
  • Language: English