James Carville is supposed to have once said, “I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter… but now I want to come back as the bond market. You can intimidate everybody.” It seems that Asian policy makers are taking his advice to heart. The Asian Bond Market Initiative (ABMI), a cooperative effort on the part of the Asean China's Role in Adjusting the Global Savings Imbalance at 2006-07-09 19:42:58
A penny saved may be a penny earned, but in China a penny saved is usually invested in an infrastructure project or an increase in manufacturing capacity. China’s gross domestic savings rate, after averaging 40% or so of GDP for most of the 1990’s, has grown over the past couple of years to close to 50% of GDP. This is an unprecedented number, and while a portion of this saving has been invested What Happens When the Current Account Deficit Unwinds? at 2006-07-09 19:42:58
Leaving aside for the moment the much trickier questions of when and how the US current account deficit will be unwound, what can we expect will happen to the US economy when foreigners become less willing to subsidize our domestic consumption? (if you can’t put it aside, see Brad Setser’s remarks at the Joint Economic Committee of Congress here and Nouriel Roubini’s PowerPoint presentation here Savings Glut or Savings Dearth? at 2006-07-09 19:42:58
Menzie Chinn and Hiro Ito have published some empirical findings that cast doubt on the global savings glut hypothesis propounded by Fed chairman-elect Bernanke and others (hat tip to Econbrowser). Their paper, entitled Current Account Balances, Financial Development and Institutions: Assaying the World ‘Savings Glut,’ attempts to quantify the determinants of current account deficits while Are Foreign Investors and Central Banks Free-Riding on China? at 2006-07-09 19:42:58
One of the most frequent criticisms lobbed at China is that its export led growth model is distorting the world’s trade and current account balances. Indeed, over the course of the past year, these global imbalances have worsened – over the first half of 2005, China’s trade surplus (on the strength of 30% y-o-y export growth) outstripped that for the whole of 2004. And China’s current account
