Working Paper


Karl Whelan



capital global financial crisis 2008 2009 policies international economic relations current account regional economic disparities regulation recurrence

Global imbalances and the financial crisis (2010)

Abstract Did global imbalances cause the financial crisis? A numberof influential figures have argued that inflows of foreign capital intothe US due to the current account deficit helped to trigger the crisis.This paper argues that the evidence for this position is weak. Thecapital inflows into the US associated with the current account deficitwere also not the key factor driving foreign purchases of US toxicassets. The so-called global savings glut was not as significant apattern as is often presented. Macroeconomic policies that reducedglobal imbalances could have been adopted but these wouldprobably not have prevented the crisis. Global policy efforts toprevent a recurrence of the financial crisis need to focus on improvedbanking regulation. Reducing global imbalances should be ofsecondary importance.
Collections Ireland -> University College Dublin -> Economics Working Papers & Policy Papers
Ireland -> University College Dublin -> School of Economics
Ireland -> University College Dublin -> College of Social Sciences and Law

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Karl Whelan

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Karl Whelan
University College Dublin
Total Publications: 70