Chapter 8: Global Imbalances: A Contemporary ‘Rashomon’ Saga
Nouriel Roubini INTRODUCTION The current debate on global current account imbalances is reminiscent of Akira Kurosawa’s ﬁlm Rashomon. In it, a terrible crime has been committed in a forest. Each of four characters agrees that something serious has occurred, but each gives a diﬀerent story or personal interpretation of what happened and why it happened and who is to blame. Similarly, the facts of the global imbalances ‘crime’ are not a matter of dispute: everyone agrees that global current account imbalances are large and growing as the United States saves less than it invests and spends more than it earns, while most of the rest of the world saves more than it invests and spends less than it earns. But the debate over the causes of this ‘crime’ and which countries are to blame is very acrimonious, especially since, rather than four characters, this contemporary saga counts at least ten (and possibly more), each with a diﬀerent argument or explanation of the causes and who is responsible. To set the scene, we must ﬁrst present the ten principal ‘suspects’. First interpretation: according to many, the United States is to blame for the global imbalances saga because of its twin ﬁscal and current account deﬁcits. Second: Federal Reserve Chairman Ben Bernanke (2005) argues that it has little to do with US ﬁscal deﬁcits (as according to him, the world is Ricardian) and is instead all about a ‘global savings glut’ triggered by emerging market economies saving too...
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