Global Imbalances and the Financial Crisis: Products of Common Caus
女人微信名Maurice Obstfeld and Kenneth Rogoff*
November 2009十谷米
Abstract
This paper makes a ca that the global imbalances of the 2000s and the recent global financial crisis are intimately connected. Both have their origins in economic policies followed in a number of countries in the 2000s and in distortions that influenced the transmission of the policies through U.S. and ultimately through global financial markets. In the U.S., the interaction among the Fed’s monetary stance, global real interest rates, credit market distortions, and financial innovation created the toxic mix of conditions making the U.S. the epicenter of the global financial crisis. Outside the U.S., exchange rate and other economic policies followed by emerging markets such as China contributed to the United States’ ability to borrow cheaply abroad and thereby finance its unsustainable housing bubble.
*University of California, Berkeley, and Harvard University. Paper prepared for the Federal Rerve Ba
nk of San Francisco Asia Economic Policy Conference, Santa Barbara, CA, October 18-20, 2009. Conference participants and especially discussant Ricardo Caballero offered helpful comments. We thank Alexandra Altman and Matteo Maggiori for outstanding rearch assistance. Financial support was provided by the Coleman Fung Risk Management Center at UC Berkeley.
活螃蟹怎么处理In my view … it is impossible to understand this crisis without reference to the global imbalances in trade and capital flows that began in the latter half of the 1990s.
--Ben S. Bernanke1
Introduction
Until the outbreak of financial crisis in August 2007, the mid-2000s was a period of strong economic performance throughout the world. Economic growth was generally robust; inflation generally low; international trade and especially financial flows expanded; and the emerging and developing world experienced widespread progress and a notable abnce of cris.
This apparently favorable equilibrium was underpinned, however, by three trends that appeared increasingly unsustainable as time went by. First, real estate values were rising at a high rate in man
y countries, including the world’s largest economy, the United States. Second, a number of countries were simultaneously running high and rising current account deficits, including the world’s largest economy, the United States. Third, leverage had built up to extraordinary levels in many ctors across the globe, notably among consumers in the United States and Britain and financial entities in many countries. Indeed, we ourlves began pointing to the potential risks of the “global imbalances” in a ries of papers beginning in 2001.2 As we will argue, the global imbalances did not cau the leverage and housing bubbles, but they were a critically important codeterminant.
28届金鹰奖In addition to being the world’s largest economy, the United States had the world’s highest rate of private homeownership and the world’s deepest, most dynamic
1 Bernanke (2009).
financial markets. And tho markets, having been progressively deregulated since the 1970s, were confronted by a particularly fragmented and ineffective system of government prudential oversight. This mix of ingredients, as we now know, was deadly.
Controversy remains about the preci connection between global imbalances and the global financial meltdown. Some commentators argue that external imbalances had little or nothing to do wi
th the crisis, which instead was the result of financial regulatory failures and policy errors, mainly on the part of the U.S. Others put forward various mechanisms through which global imbalances are claimed to have played a prime role in causing the financial collap. Former U.S. Treasury Secretary Henry Paulson argued, for example, that the high savings of China, oil exporters, and other surplus countries depresd global real interest rates, leading investors to scramble for yield and under-price risk.3
We too believe that the global imbalances and the financial crisis are intimately connected, but we take a more nuanced stance on the nature of the connections.In our view, both originated primarily in economic policies followed in a number of countries in the 2000s (including the United States) and in distortions that influenced the transmission of the policies through U.S. and ultimately through global financial markets.
The United States’ ability to finance macroeconomic imbalances through easy foreign borrowing allowed it to postpone tough policy choices (something that was of cour true in many other deficit countries as well). Foreign banks’ appetite for asts that turned out to be toxic provided one ready source of external funding for the U.S. deficit. Not only was the U.S. able to borrow in dollars at nominal interest rates kept low
2 See Obstfeld and Rogoff (2001, 2005, 2007).万圣节是几号
3 Guha (2009).
个人年终述职报告by a loo monetary policy. Also, until around the autumn of 2008, exchange rate and other ast-price movements kept U.S. net foreign liabilities growing at a rate far below the cumulative U.S. current account deficit.
如何种草莓At the same time, countries with current account surplus faced minimal pressures to adjust. China’s ability to sterilize the immen rerve purchas it placed in U.S. markets allowed it to maintain an undervalued currency and defer rebalancing its own economy. Complementary policy distortions therefore kept China artificially far from its lower autarky interest rate and the U.S. artificially far from its higher autarky interest rate. Had emingly low-cost postponement options not been available, the subquent crisis might well have been mitigated, if not contained.4
We certainly do not agree with the many commentators and scholars who argued that the global imbalances were an esntially benign phenomenon, a natural and inevitable corollary of backward financial development in emerging markets. The commentators, including Cooper (2007) and Dooley, Folkerts-Landau, and Garber (2005), as well as Caballero, Farhi, and Gourinchas (2008a) a
nd Mendoza, Quadrini, and Rios-Rull (2007), advanced frameworks in which the global imbalances were esntially a “win-win” phenomenon, with developing countries’ residents (including governments) enjoying safety and liquidity for their savings, while rich countries (especially the dollar-
4 While we would not fully subscribe to Portes’ (2009) blunt asssment that “global macroeconomic imbalances are the underlying cau of the crisis,” we find common ground in identifying veral key transmission mechanisms from policies to the endogenous outcomes. Perhaps (to paraphra Bill Clinton) it depends what you mean by “underlying.” Jagannathan, Kapoor, and Schaumberg (2009) ascribe industrial-country policies of the 2000s to the increa in the effective global labor force brought about by the collap of the Soviet bloc and economic liberalization in China and India. It is plausible that the changes exerted downward pressure on global inflation, as suggested by Greenspan (2004), reducing the price pressures that low policy interest rates might otherwi have unleashed. Nishimura (2008) posits that the same demographic forces placed upward pressure on industrial-country ast prices in the late 1990s and 2000s.
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issuing United States) benefited from easier borrowing terms.5 The fundamental flaw in the analys, of cour, was the assumption that advanced-country capital markets, especially tho of t
he United States, were fundamentally perfect, and so able to take on ever-increasing leverage without risk. In our 2001 paper we ourlves underscored this point, identifying the rapid evolution of financial markets as posing new, untested hazards that might be triggered by a rapid change in the underlying equilibrium.6 Bini Smaghi’s (2008) asssment thus ems exactly right to us: “[E]xternal imbalances are often a reflection, and even a prediction, of internal imbalances.
[E]conomic policies … should not ignore external imbalances and just assume that they will sort themlves out.”7 In this paper we describe how the global imbalances of the 2000s both reflected and magnified the ultimate causal factors behind the recent financial crisis. At the end, we identify policy lessons learned. In effect, the global imbalances pod stress tests for weakness in the United States, British, and other advanced-country financial and political systems – tests that tho countries did not pass.
5 At the end of their paper, Caballero, Farhi, and Gourinchas (2008a) point to the risks of excessive leverage, which are not incorporated in their model. Caballero, Farhi, and Gourinchas (2008b) extend their earlier framework to analyze the aftermath of a bubble collap. Gruber and Kamin (2008) argue that as an empirical matter, conventional measures of financial development explain neither the size of the net capital flows from emerging to mature economies, nor their concentration
on U.S. asts. Gruber and Kamin also argue that U.S. bond yields have been comparable to tho of other industrial countries, contrary to the view that American liabilities have been especially attractive to foreign portfolio investors. Acharya and Schnabl (2010) show that banks in industrial surplus and deficit countries alike t up extensive ast-backed commercial paper conduits to issue purportedly risk-free short-term liabilities and purcha risky longer-term asts from industrial deficit countries, mostly denominated in dollars. This finding also throws doubt on the hypothesis that emerging-market demand for risk-free asts that only the U.S. could provide was the underlying cau of the U.S. current account deficit.
6 See also the concerns raid by Obstfeld and Rogoff (2005, 2007), as well as Obstfeld (2005), who follows up on the themes by warning that “The complex chains of counterparty obligation that have arin in the global economy, typically involving hedge funds and other nonbanks and impossible to track
