How Important Are Global Saving Imbalances?
The post How Important Are Global Saving Imbalances? appeared on BitcoinEthereumNews.com. Global imbalances are smaller than they were in 2007, but they have not disappeared. getty Few topics in international economics dominated the policy conversation of the early 2000s as completely as global saving imbalances. The fear at the time was that the United States had become the borrower of last resort for the world’s excess saving, running current-account deficits on a scale that could not continue indefinitely, and that when the imbalance unwound, the adjustment might be abrupt and ugly. Two decades on, the imbalances are smaller and the rhetoric is calmer, but the underlying economics has not gone away. To see why, it helps to begin with an accounting identity. In an open economy, the current account reflects national saving minus domestic investment. A surplus country saves more than it invests at home and sends the difference abroad. A deficit country does the reverse. It invests more