Potential employment effects of a global rebalancing

There is widespread agreement that the persistently large imbalances in the world economy – with sizeable current-account deficits in some countries, particularly the United States, and sizeable current-account surpluses in others, notably China, Germany, Japan and a number of oil-exporting countries – contributed to the outbreak of the current economic and financial crisis and facilitated its global spread (see also TDR 2009, chap. I). There is also agreement that a smooth and non-deflationary reduction of these imbalances is indispensable for ensuring that the recent global economic upturn continues. This chapter focuses on the effects of global rebalancing on the patterns of global demand and trade flows.

Related Subject(s): International Trade and Finance