Sources of Macroeconomic Imbalances in the World Economy: A Simulation Approach / Jeffrey D. Sachs, Nouriel Roubini.

Format:

Book

Author/Creator:

Sachs, Jeffrey D.

Contributor:

National Bureau of Economic Research.

Roubini, Nouriel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2339.

NBER working paper series no. w2339

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Sources of Macroeconomic Imbalances in the World Economy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Summary:

This paper uses a global macroeconomic simulation model to identify the factors that have contributed to global trade and financial imbalances in the 1980s. After investigating the properties of monetary and fiscal policies in the model, we examine whether the budgetary shifts in the OECD economies in the 1980s can account for the bulk of trade and exchange rate movements. Our conclusions are mixed. The combination of sharply higher fiscal deficits in the United States and sharply reduced deficits in Japan goes far to explain the movements of the trade balances and exchange rates of the two economies. However, the drop in the dollar vis-a-vis the Yen since late 1985 is not well explained by the model. We also investigate the prospects for a reduction of the U.S. trade deficits if U.S. budget deficits are in fact reduced, as well as the possible role for Japanese monetary and fiscal policies in reducing the trade imbalances of the two countries.

Notes:

Print version record

August 1987.