Global Imbalances - Recent Developments and Prospects (Bernanke 2007)

65 percent on average in july 2005 in canada yields

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2007 as compared with a yield of 1.65 percent, on average, in July 2005. In Canada, yields on inflation-adjusted bonds moved from 1.76 percent in July 2005 to 2.18 percent in July 2007. Real interest rates, calculated as government bond yields minus twelve-month inflation rates, have also moved up since 2005 in Germany, Sweden, and Switzerland. Return to text 9. An interesting vein of recent research suggests that one of the reasons that developing countries seek to run current account surpluses is to finance the acquisition of high-quality assets they cannot produce in their own economies. Refer to Caballero, Farhi, and Gourinchas (2006) and Mendoza, Quadrini, and Rios-Rull (2007). Return to text 10. During 2002-06, gross foreign official inflows totaled $1,491 billion; net official inflows were only slightly less, as U.S. official outflows were negligible. Private foreign inflows net of private U.S. outflows totaled $1,659 billion during the same period; gross foreign private inflows were $4,697 billion. Return to text 11. Another way to make this point is that current account balances and surpluses give countries the flexibility to spend more or less than their current output, as dictated by economic conditions and needs. Return to text Return to top 2007 Speeches
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