Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/31466
Authors: 
Bibow, Jörg
Year of Publication: 
2006
Series/Report no.: 
Working papers // The Levy Economics Institute 486
Abstract: 
Approaching the issue of mounting global imbalances from the perspective of the "Bretton Woods II hypothesis," this paper argues that the popular preoccupation with China's supposed export-led development strategy is misplaced. It also suggests, similar to Japan's depression, subdued growth in Euroland for most of the time since the Maastricht Treaty has been of first-order importance in these developments. Germany is identified as being at the heart of the European trouble. Globally, there is an ongoing clash between two approches to macroeconomic policy making: a highly dogmatic German approach, and a very pragmatic Anglo-Saxon one. The low levels of interest at which global demand imbalances have been smoothed out financially reflect deficient global demand in an environment of vast supply-side opportunities. After contributing greatly to the build-up of imbalances, Euroland is unlikely to play any constructive part in their unwinding. Hampered by an exchange-rate policy vacuum, a small-country mindset, and soaring intra-area imbalances, Euroland is also illpositioned to cope with fading external growth stimuli.
Subjects: 
Global Imbalances
Revised Bretton Woods
EMU
Divergences
Export-led Growth
Reserve Currency
JEL: 
E63
F02
F32
F43
N10
Document Type: 
Working Paper

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