Working Paper: NBER ID: w11383
Authors: Michael D. Bordo
Abstract: This paper takes an historical perspectives approach to the current episode of global imbalances. I consider four historical episodes which may give some indications as to whether the adjustment to U.S. current account deficit will lead to a 'benign' or 'gloomy' outlook. The episodes are: the transfer of capital in the earlier era of globalization the late nineteenth century; the interwar gold exchange standard; Bretton Woods; and the 1977-79 dollar crisis. I conclude that adjustment in earlier era of globalization has more resonance for the current imbalance than the other scenarios.
Keywords: No keywords provided
JEL Codes: F02; F32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| historical capital transfers (F16) | today's adjustment mechanisms (F32) |
| poor U.S. monetary policy in the 1970s (E65) | instability (C62) |
| adjustments in pre-1914 era of globalization (N13) | U.S. current account deficit adjustment (F32) |
| misalignments and inappropriate policies in historical periods (B15) | severe economic consequences (F69) |