Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94483
Authors: 
Schnabl, Gunther
Freitag, Stephan
Year of Publication: 
2012
Series/Report no.: 
Working Papers on Global Financial Markets 25
Abstract: 
The paper discusses global current account imbalances in the context of an asymmetric world monetary system and asymmetric current account developments. It identifies the US and Germany as center countries with rising / high current account deficits (US) and surpluses (Germany). These are matched by current account surpluses of countries stabilizing their exchange rates against the dollar (dollar periphery) and current account deficits of countries stabilizing their exchange rate against the euro or members of the euro area (euro periphery). The paper finds that changes of world current account positions are closely linked to the monetary policy decision patterns both in the centers and peripheries. Whereas in the centers current account positions are affected by monetary policies, in the peripheries exchange rate stabilization cum sterilization matters. In specific, monetary expansion in the US as well as exchange rate stabilization and sterilization policies in the dollar periphery are found to have contributed to global imbalances.
Subjects: 
Global Imbalances
Intra-European Imbalances
Asymmetric Monetary Policies
Foreign Reserve Accumulation
Sterilization
Granger Causality Tests
Panel Regressions
JEL: 
F31
F32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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