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Transpacific Trade Imbalances: Causes and Cures

McKibbin, Warwick; Park, Yung Chul; Lee, Jung-Wha (Jenny)

Description

This paper explores the causes of the transpacific trade imbalances using an empirical global model. It also evaluates the impact of various policies to reduce these imbalances. We find the fundamental cause of trade imbalance since 1997 is changes in saving-investment gaps, attributed to the surge of the US fiscal deficits and the decline of East Asia's private investment after the 1997 financial crisis. Our simulation results show that a revaluation of East Asia's exchange rates by 10 per...[Show more]

CollectionsANU Research Publications
Date published: 2006
Type: Journal article
URI: http://hdl.handle.net/1885/18597
Source: The World Economy
DOI: 10.1111/j.1467-9701.2006.00783.x

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