A Study On The Path、Mode And Cost Of Global Imbalance Adjustment

The current global imbalance started in the late 1990s. On one hand, in U.S. there is a huge current account deficit and the growing rapidly debt.On the other hand, Japan, China and other major emerging market countries in Asia hold a lot of trade surplus for U.S.. The current global imbalance has become the main features of the world economy and also a major risk. Thus it becomes a hot research issue for academics, policy makers, the international agencies.The current global imbalance was caused by many reasons, not by one country or due to a unilateral problem. Meanwhile, the global imbalance and the adjustment risks are the challenges faced by the world. To explore the adjustment which is controllable risk, cost minimization is conducive for world economic stability. With the development of China’s open economy, the Chinese economy is increasingly close with the world economy.The external balance in macroeconomic is more and more important. As a surplus country of the current global imbalance, China is confronted with international pressure of RMB appreciation, trade frictions in the unfavorable situation, excess liquidity, the loss of monetary policy independence. System studying of the cost, risk of the global imbalance adjustment will promote in-depth theoretical understanding of the problem and develop the measures to minimize the negative impact of the global imbalance adjustment on China. This will help China implement the concept of mutual benefit and win-win opening up, promote China’s sustained economic development and prosperity.On the one hand, as a result of globalization, today’s global imbalance showed different characteristics from the past, it was more complicated; on the other hand, with the continuous development of the theory, the current global economic imbalances are deepening understood through profound theoretical model and econometric tool. With further research, the academic had reached the basic agreement on the reason of global imbalance and its sustainability, then the research focused on global imbalance adjustment. In this thesis, based on the current account balance payment theory, three paths of global imbalance adjustment are summarized, and Chi-square test is adopted on the current account reversal path of 89 countries from 1980 to 2009; considering the difference between the sudden adjustment and gradual one of global imbalances, and the specific identification criteria are given, on this basis to compare the corresponding adjustment costs. These deepen the awareness of the global imbalance adjustment and its cost. The thesis will discuss China’s role in global imbalances adjustment and its impact on the Chinese economy. It can provide some theoretical support for China to respond to global imbalance adjustment. The dissertationis divided into seven chapters, the specific contents are listed as follows:ChapterⅠilluminates the great significance of the research on the global imbanlance adjustment, reviews about the reseach achievement in this area, and describes the structure arrangements, the study methods, the theoretical framework and innovations.ChapterⅡreviews the current accounte balance theory. The current account balance theory has gone from theory of elasticity approach to the current account intertemporal analysis.ChapterⅢdescribes the current global imbalance and analylizes the reasons of global imbalance.ChapterⅣsummerizes three paths of global imbalance on the base of the current account balance theory. Three paths are exchange rate adjustment path, the domestic savings rate adjustment path and financial deepening level adjustment path.The non-parametric test is adopted to doing the empirical analysis of the path of global imbalances adjustment.ChapterⅤdefines two models of the global imbalance adjustment, and they are gradual adjustment model and sudden adjustment model. By the multivariate Logit model the factores of global imbalance adjustmeny probability are analylized. These factors include a country’s current account deficit, exchange rate, trade openness, financial openness and so on. On this basis, considering the endogeneity of the global imbalance adjustment, the treatment effects model is adopted to explore and compare the cost of different models of adjustment.ChapterⅥanalyzes the global imbalance adjustment in.the context of the financial crisis. Firstly the dynamic adjustment of the major surplus countries and deficit countries is introduced on the background of financial crisis; then in the context of the financial crisis the reasons for global imbalance adjustment are analyzed; on this basis, VAR model is adopted to forecast on the U.S. current account deficit.ChapterⅦdiscusses China’s role in adjustment of global imbalances, and its impact on the Chinese economy, and gives the suggestion about how China responds to the challenge of the global imbalance adjustment.