Working Paper

Global Imbalances: Past, Present and Future

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After the inception and, hopefully, the passing of the most dangerous phase of the international financial crisis, economists have returned to the long favoured subject of global imbalances.

Because of the outbreak of the crisis it had been momentarily set aside after it had been very fashionable since at least the late sixties and even more in the decades after the oil crisis and the demise of the Bretton Woods system. The issue had continued to be hotly debated also in the early years of the new millennnium.

In what follows I shall try to look at global imbalances first in a historical perspective, in order to understand how we got where we are. I will then turn my attention to causal links between the formation of global imbalances and the outbreak of the international financial crisis. I will also consider the likelihood that global imbalances, after showing, because of the crisis, a sizeable decrease in size, may go up again in the near future. Within this context I will also analyse the problem of current account imbalances inside a monetary union, and the consequences for the union and for the rest of the international economic and financial system.