Summary of Rebalancing a Lopsided Global Economy

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Experts point to significant economic disparities among the advanced and emerging markets, but G-20 leaders consider inequities in a nation’s current account – which gauges domestic savings versus investment – as the greatest potential threat to the world economic framework. Researcher Adam Triggs assesses the efficacy of the G-20’s proposals to mitigate the current account gaps spread across the globe. getAbstract suggests this comprehensive and technical report to economists and public policy analysts.

About the Author

Adam Triggs is a visiting researcher at the Brookings Institution.

 

Summary

Beginning in 2000, the current account imbalances of the major economies accelerated at an alarming rate, creating a “lopsided global economy.” A nation’s current account represents the gap between the money it saves and the money it invests domestically. Economists say that the growth in international imbalances triggered “unsustainable booms in credit and asset prices” that paved the way for the Great Recession.

In 2008, G-20 leaders publicly announced a policy architecture designed to correct the current account disparities between countries. That framework evolved to...


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