External Sector Rebalancing and Endogenous Trade Imbalance Models

Artikel

I discuss the need for trade models to incorporate endogenous trade imbalances both to more adequately capture the reality of a global economy with large imbalances and pressures from the financial crisis for countries to reduce imbalances. Conventional general equilibrium trade models implicitly incorporate monetary neutrality and either have zero trade balance as a property of equilibrium, or have a fixed and exogenous trade imbalance. Models which are discussed here have a variety of forms. In one, central banks fix exchange rates and operate a non accommodative monetary policy and accumulate reserves. Changes in both trade and monetary policies change reserve accumulative and with the external sector imbalances. This is a reflection of China's current policy regime. In another intertemporal preferences allow for simultaneous inter commodity and intertemporal trade across countries, and with changed intertemporal trade changed external sector imbalances within the period. These formulations are each applied to potential tax initiatives to aid in rebalancing.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Contemporary Economics ; ISSN: 2084-0845 ; Volume: 6 ; Year: 2012 ; Issue: 4 ; Pages: 20-26 ; Warsaw: Vizja Press & IT

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Computable General Equilibrium Models ; International Policy Coordination and Transmission ; Current Account Adjustment; Short-term Capital Movements
• Subject: endogenous trade model ; general equilibrium ; external sector imbalances

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Whalley, John
• Event: Veröffentlichung
• (who): Vizja Press & IT
• (where): Warsaw
• (when): 2012

Further information

• DOI: doi:10.5709/ce.1897-9254.64
• Handle: http://hdl.handle.net/10419/105398
• Last update: 10.03.2025, 11:44 AM CET