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1/10
CFR has put together an excellent “Global Imbalances Tracker” that allows users access to current account data in a very handy format. There were two things that struck me most as I went through it.
https://on.cfr.org/3mIWx7W via @CFR_org
CFR has put together an excellent “Global Imbalances Tracker” that allows users access to current account data in a very handy format. There were two things that struck me most as I went through it.
https://on.cfr.org/3mIWx7W via @CFR_org
2/10
First, CFR helpfully groups together the Anglophone countries (US, UK, Canada, Australia, NZ) to show that collectively they typically account for roughly 2/3s to 3/4s of global current account deficits. This is an extraordinarily high share, especially considering that...
First, CFR helpfully groups together the Anglophone countries (US, UK, Canada, Australia, NZ) to show that collectively they typically account for roughly 2/3s to 3/4s of global current account deficits. This is an extraordinarily high share, especially considering that...
3/10
trade theory suggests advanced economies should generally be running surpluses. In fact the CFR data show that other advanced economies do indeed overwhelmingly run current account surpluses, collectively accounting for roughly two-thirds of total global surpluses.
trade theory suggests advanced economies should generally be running surpluses. In fact the CFR data show that other advanced economies do indeed overwhelmingly run current account surpluses, collectively accounting for roughly two-thirds of total global surpluses.
4/10
Why should the Anglophone economies, especially the US and the UK, diverge so strongly? I have long argued that what these finance-dominated economies have most in common are flexible, highly liquid, and well-governed capital markets that receive a disproportionate...
Why should the Anglophone economies, especially the US and the UK, diverge so strongly? I have long argued that what these finance-dominated economies have most in common are flexible, highly liquid, and well-governed capital markets that receive a disproportionate...
5/10
share of global excess savings, and it is their absorption of foreign excess savings that forces down their domestic savings and drives their current-account deficit positions. The CFR data are very consistent with this argument.
share of global excess savings, and it is their absorption of foreign excess savings that forces down their domestic savings and drives their current-account deficit positions. The CFR data are very consistent with this argument.
6/10
The second thing that struck me is Mexico’s current account position. At the beginning of Trump’s presidency Mexico ran a current account deficit equal to roughly 8-10% of its GDP, which means it was absorbing excess global savings of that same amount, and so relieving...
The second thing that struck me is Mexico’s current account position. At the beginning of Trump’s presidency Mexico ran a current account deficit equal to roughly 8-10% of its GDP, which means it was absorbing excess global savings of that same amount, and so relieving...
7/10
the US of a comparable burden. This actually helped reduce the US current account deficit, even though the US ran a large bilateral deficit with Mexico (which is just more evidence that bilateral trade data is all but useless in determining trade pressures).
the US of a comparable burden. This actually helped reduce the US current account deficit, even though the US ran a large bilateral deficit with Mexico (which is just more evidence that bilateral trade data is all but useless in determining trade pressures).
8/10
Over the next four years, however, Mexico’s overall deficit shrank rapidly, to end in a surplus of roughly 5% of GDP. This means that during this period Mexico went from helping to relieve the US from absorbing excess global savings to adding to the burden, which is...
Over the next four years, however, Mexico’s overall deficit shrank rapidly, to end in a surplus of roughly 5% of GDP. This means that during this period Mexico went from helping to relieve the US from absorbing excess global savings to adding to the burden, which is...
9/10
exactly what @M_C_Klein and I argued would most likely happen if trade conflict with Mexico undermined confidence in the Mexican economy. It turns out that the US would have been better off from a trade point of view if it...
https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars
exactly what @M_C_Klein and I argued would most likely happen if trade conflict with Mexico undermined confidence in the Mexican economy. It turns out that the US would have been better off from a trade point of view if it...
https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars
10/10
had supported the Mexican economy rather than burden it with a misconceived trade conflict. The more excess savings invested in developing economies, it turns out, the better for everyone. https://carnegieendowment.org/chinafinancialmarkets/68506
had supported the Mexican economy rather than burden it with a misconceived trade conflict. The more excess savings invested in developing economies, it turns out, the better for everyone. https://carnegieendowment.org/chinafinancialmarkets/68506
