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2 edition of An equilibrium model of global imbalances and low interest rates found in the catalog.

An equilibrium model of global imbalances and low interest rates

by Ricardo J. Caballero

  • 175 Want to read
  • 37 Currently reading

Published by Massachusetts Institute of Technology, Dept. of Economics in Cambridge, MA .
Written in English


About the Edition

Three of the most important recent facts in global macroeconomics - the sustained rise in the US current account deficit, the stubborn decline in long run real rates, and the rise in the share of US assets in global portfolio - ear as anomalies from the perspective of conventional wisdom and models. Instead, in this paper we provide a model that rationalizes these facts as an equilibrium outcome of two observed forces: a) potential growth differentials among different regions of the world and, b) heterogeneity in these regions" capacity to generate financial assets from real investments. In extensions of the basic model, we also generate exchange rate and FDI excess returns which are broadly consistent with the recent trends in these variables. Unlike the conventional wisdom, in the absence of a large change in (a) or (b), our model does not augur any catastrophic event. More generally, the framework is flexible enough to shed light on a range of scenarios in a global equilibrium environment. Keywords: Current account deficits, capital flows, interest rates, global portfolios and equilibrium, growth and financial development asymmetries, exchange rates, FDI, intermediation rents. JEL Classifications: EO, F3, F4, G1.

Edition Notes

StatementRicardo J. Caballero, Emmanuel Farhi [and] Pierre-Olivier Gourinchas
SeriesWorking paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 06-02, Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 06-02.
ContributionsFarhi, Emmanuel, Gourinchas, Pierre-Olivier, Massachusetts Institute of Technology. Dept. of Economics
The Physical Object
Pagination53 p. :
Number of Pages53
ID Numbers
Open LibraryOL24643613M
OCLC/WorldCa68044257

Caballero, Ricardo J., Emmanuel Farhi, and Pierre-Olivier Gourinchas. “Global Imbalances and Currency Wars at the ZLB”.Cited by: This paper explores the consequences of extremely low equilibrium real interest rates in a world with integrated but heterogenous capital markets, and nominal rigidities. “ An Equilibrium Model of Global Imbalances and Low Interest Rates.” American Economic Review 98 (1): Types of Publications. Book (2) Journal Article (43).

Many observers (for example, Roubini and Setser a, b, a, b) fear that the correction of global imbalances could lead to a period of disorderly adjustment, characterised by turmoil in currency and asset markets, a slowdown in economic activity, and ultimately large welfare costs for the world economy as a . In this paper we assess the implications of precautionary savings for global imbalances by considering a world economy model composed by the US, the Euro Area, Japan, China, oil-exporting countries, and the rest of the world. These areas are assumed to differ only with respect to GDP volatility which is calibrated based on the period. The.

will go through selective recent papers or book chapters, which are mostly provided below or *Sheffrin, S.M. and W.T. Woo (), “Present value tests of an intertemporal model of the current account”, E., Gourinchas, P.-O. () “An equilibrium model of global imbalances and low interest rates”, AER, 98, 1, D. Capital. Oct 20,  · Theory and historical evidence suggest that such restrictiveness would cause an increase in longterm interest rates. Global imbalances in the form of sustained and increasing international capital flows to the US are believed to be a promising explanatory factor for Cited by: 1.


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An equilibrium model of global imbalances and low interest rates by Ricardo J. Caballero Download PDF EPUB FB2

An Equilibrium Model of “Global Imbalances” and Low Interest Rates By Ricardo J. Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas* The sustained rise in US current account deficits, the stubborn decline in long-run real rates, and the rise in US assets in global portfolios appear as anoma-lies from the perspective of conventional.

Mar 01,  · An Equilibrium Model of "Global Imbalances" and Low Interest Rates by Ricardo J. Caballero, Emmanuel Farhi and Pierre-Olivier Gourinchas. Published in volume 98, issue 1, pages of American Economic Review, MarchAbstract: The sustained rise in US current account deficits, the stubborn d.

An Equilibrium Model of "Global Imbalances" and Low Interest Rates Ricardo J. Caballero, Emmanuel Farhi, Pierre-Olivier Gourinchas. NBER Working Paper No. Issued in. Caballero, Ricardo J & Farhi, Emmanuel & Gourinchas, Pierre-Olivier, "An Equilibrium Model of "Global Imbalances" and Low Interest Rates," Center for International and Development Economics Research, Working Paper Series qt7xc0g8mm, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.

"An Equilibrium Model of Global Imbalances and Low Interest Rates," Meeting PapersSociety for Economic Dynamics. Ricardo J Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, "An equilibrum model of "global imbalances" and low interest rates," BIS Working PapersBank for International Settlements.

An Equilibrium Model of “Global Imbalances” and Low Interest Rates Ricardo J. Caballero Emmanuel Farhi Pierre-Olivier Gourinchas∗ This Draft: March 27, Abstract Three of the most important recent facts in global macroeconomics — the sustained rise in the US. An Equilibrium Model of "Global Imbalances" and Low Interest Rates The Harvard community has made this article openly available.

Please share how this access benefits you. Your story matters Citation Caballero, Ricardo J., Emmanuel Farhi, and Pierre-Olivier Gourinchas. An Equilibrium Model of “Global Imbalances” and Low Interest Rates. An Equilibrium Model of “Global Imbalances” and Low Interest Rates Ricardo J.

Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas NBER Working Paper No. JanuaryRevised May JEL No. E0, F3, F4, G1 ABSTRACT Three of the most important recent facts in global macroeconomics -- the sustained rise in the US. More generally, the framework is flexible enough to shed light on a range of scenarios in a global equilibrium environment.

Keywords: Current account deficits, capital flows, interest rates, global portfolios and equilibrium, growth and financial development asymmetries, exchange rates, Pages: countries,andhighsavingnewlyindustrializedeconomies,suchasHong-Kong,consumersnewhomeconstruction.com UandEproducegoodqualityfinancialinstruments.R,ontheotherhand.

An Equilibrium Model of “Global Imbalances” and Low Interest Rates. American Economic Review 98, no. 1: Abstract Three of the most important recent facts in global macroeconomics — the sustained rise in the US current account deficit, the stubborn decline in long run real rates, and the rise in the share of US assets in global.

Note: Citations are based on reference standards. However, formatting rules can vary widely between applications and fields of interest or study. The specific requirements or preferences of your reviewing publisher, classroom teacher, institution or organization should be applied.

Farhi, Emmanuel, Ricardo Caballero, and Pierre-Olivier Gourinchas. “An Equilibrium Model of Global Imbalances and Low Interest Rates.” American Economic Review 98 (1): Cited by: Global imbalances refers to the situation where some countries have more assets than the other countries.

In theory, when the current account is in balance, it has a zero value: inflows and outflows of capital will be cancelled by each consumersnewhomeconstruction.com, if the current account is persistently showing deficits for certain period it is said to show an inequilibrium. In extensions of the basic model, we also generate exchange rate and FDI excess returns which are broadly consistent with the recent trends in these variables.

More generally, the framework is flexible enough to shed light on a range of scenarios in a global equilibrium consumersnewhomeconstruction.com by: Global Imbalances and Low Interest Rates: An Equilibrium Model vs. a Disequilibrium Reality Comments in response to the paper by Ricardo Caballero, Emmanuel Farhis & Pierre-Olivier Gourinchas Jeffrey Frankel Harpel Professor, Harvard University.

Get this from a library. An equilibrium model of. Abstract: Three of the most important recent facts in global macroeconomics -- the sustained rise in the US current account deficit, the stubborn decline in long run real rates, and the rise in the share of US assets in global portfolio -- appear as anomalies from the perspective of conventional wisdom and models.

Request PDF | Global Imbalances and Low Interest Rates: An Equilibrium Model vs. A Disequilibrium Reality | The most obvious explanation for the large and widening US current account deficit is. Global Imbalances and Low Interest Rates: An Equilibrium Model vs.

a Disequilibrium Reality. John F. Kennedy School of Government Faculty Research Working Paper Series RWP Sample Thesis Paper. There were a number of factors that led to an increased demand for US assets in the global market.

The fact of the matter is that signs of this global recession were observable as early as (Caballero, Farhi and Gourinchas, An Equilibrium Model of “Global. Caballero, Ricardo J., Emmanuel Farhi, and Pierre-Olivier Gourinchas ().

"An Equilibrium Model of 'Global Imbalances' and Low Interest Rates," American Economic Review, vol. 98 (1), pp.

Carlson, Mark, Burcu Duygan-Bump, Fabio Natalucci, William R. Nelson, Marcelo Ochoa, Jeremy Stein, and Skander Van den Heuvel (forthcoming).And here lies the first reason why we should be concerned about chronically low interest rates: When the equilibrium interest rate is very low, the economy is more likely to fall into the liquidity trap; it becomes more vulnerable to adverse shocks that might render conventional monetary policy ineffective.Emmanuel Farhi (born September 8, ) is a French economist who is currently a professor of economics at Harvard University.

His research focuses on macroeconomics and finance. He was a member of the French Economic Analysis Council to the French Prime Minister from to Alma mater: École Normale Supérieure, Corps .