Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/71332 
Authors: 
Year of Publication: 
2010
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP10/13
Publisher: 
University College Dublin, UCD School of Economics, Dublin
Abstract: 
Did global imbalances cause the financial crisis? A number of influential figures have argued that inflows of foreign capital into the US due to the current account deficit helped to trigger the crisis. This paper argues that the evidence for this position is weak. The capital inflows into the US associated with the current account deficit were also not the key factor driving foreign purchases of US toxic assets. The so-called global savings glut was not as significant a pattern as is often presented. Macroeconomic policies that reduced global imbalances could have been adopted but these would probably not have prevented the crisis. Global policy efforts to prevent a recurrence of the financial crisis need to focus on improved banking regulation. Reducing global imbalances should be of secondary importance.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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