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Global Imbalance - Balance of Payments Global imbalance...

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Balance of Payments Global imbalance Global imbalances (1996-2009) Persistent global imbalances: Some countries have been consistently borrowing large amounts of money from others. Why? Dasgupta (UofT) Topic 4 25 / 33
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Balance of Payments Global imbalance 1. Global savings glut Individual uncertainty: As developing countries embrace the market, the social safety net is disappearing. Aggregate uncertainty: Lessons learned from the Asian financial crisis caused countries to accumulate reserves. High price of oil: Saving, rather than consuming, out of oil revenues by oil exporters (Example - Sovereign Wealth Funds). Dasgupta (UofT) Topic 4 26 / 33
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Balance of Payments Global imbalance 2. Low domestic investment Poor financial intermediation:
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