The Cause Of The Global Economic Imbalances, Adjustment And Programs

Since 1990s, the global imbalances have been increasing rapidly, and becoming frontier topic in today's world economy. Its development will bring profound influence to global economy. This paper summarizes three previous global imbalances, and then focuses on current ongoing imbalances. Next, the paper reviews the academe's main views on causes of global imbalances. It indicates that the growth differentials and heterogeneous financial market cause the excess demand of U.S. assets which trigger the global imbalances.We set up a general equilibrium models based on global portfolio supply and demand, including some factors such as economic growth, finance deepening and capital flow, and analysis on reversal-effect produced by finance deepening. The paper indicates, because of growth differentials and heterogeneous financial market between them, international capital always flows from the Emerging Markets in Asia to US, and then US current account deficit will stay for a long time; If considering financial market's improvement in the Emerging Markets, US current account will surplus, real interest will increase, and net dollar assets ratio owned by the Emerging Markets will decrease; Real exchange rate can improve Global Imbalances to some degree.In accordance with the theoretical framework, the empirical analysis uses Chow Test to evaluate whether the current account will have structure change after financial impact. And then we use time series model to judge the quantitative relations between current account and explanatory variables.Finally, we achieve main solutions of global imbalances which focus on portfolio supply and demand equilibrium.