iley & lewis - untangling the us deficit; evaluating causes, cures and global imbalances (2007)

[...]... simple answer since they are son-in-law and father-in-law, and there is a precedent for such a connection in the form of two earlier Elgar volumes with another son-in-law Mother and daughter were on hand to bring things to a close by setting an unbreakable deadline for the book’s completion of end-November 2006 Without this, it might still be in the process of draft and re-draft! To them we owe considerable... The plan of the book is as follows Chapters 2 and 3 focus on the causes of the US current account deficit The analysis is built around the four major analytical strands: the trade balance view (related to exports, imports and debt servicing); the absorption view (revolving around domestic demand and supply); the savings and investment view (concerning the imbalance between investment and savings); and. .. surpluses of the oil-exporting countries The two less well known sources are the ‘old’ economies of Japan and Europe, and the private and official capital responding to financial innovations in US financial markets The essence of the problem 15 Funds are attracted to the United States because of the sophistication and innovation of US capital markets, but the monetary role of the US dollar underpins the. .. on the demand for US assets, starting with the implications of a reduction in home bias for the financing of the US deficit The chapter then goes on to examine the main sources of capital flows to the United States over the last decade Four main sources are identified Two of them are well discussed in the literature, these being the vast increase in invested funds emanating from non-Japan Asia and the. .. producing the most comprehensive account to date of the various views and how they contribute to the story of the evolution of the US current account deficit Because the United States occupies such a central position in the world order, an analysis of the US deficit necessarily overlaps with global geopolitics and the United States’ relationships with China, Japan, the European Union, oil exporters and others... government and central bank purchases of US government bonds and bills are also attributed to countries at the periphery of the international system adopting export-led growth strategies by using capital controls and undervalued exchange rates linked to the dollar, with China again the prime suspect, limiting the movement of the yuan vis-à-vis the dollar and making Chinese goods artificially cheap Together, the. .. leads us to the question of sustainability and Chapter 6 considers alternative scenarios of the extent and sustainability of the US current account position The orthodox analysis of the dynamics of the current account balance serves as the starting point, but the conclusions of this analysis are found to be compromised by the ‘unorthodox’ behaviour of the United States’ external balance sheet There then... must be because the elasticity of demand for imports is greater than one, so that the value of imports falls With no reduction in the US dollar value of exports and a decline in the value of imports, the balance of trade must improve Vice versa, should the demand for imports have zero elasticity, the value of imports will rise in US dollars by the full percentage of the depreciation But if the demand... academics and others have put forward to account for the phenomenon of the US external deficit One inspiration for the volume came from the observation of ex-Federal Reserve Vice-Chairman Roger Ferguson that there had been few attempts to evaluate the full range of explanations advanced for the US deficit The first task we had was to develop an organizing framework to deal with the different hypotheses, with the. .. Various hypotheses built around this theme are surveyed in this chapter Chapter 5 focuses on the nature of the adjustment mechanisms to payments imbalances in the context of a world system of independent currencies and ‘international financial laissez-faire’, the term used by Max Corden (1983) to describe the new policy environment post-Bretton Woods Thanks to the arguments of Alan Greenspan and others . h0" alt="" Untangling the US Deficit