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Introduction. The article is devoted to clarifying the essence of systemic problems that arise in various areas and lead to global imbalances and global financial crises. As the economies of different countries develop at “different speeds”, economic imbalances, “financial gaps”, infrastructure and technological failures are becoming commonplace. The article focuses on the development of the latest financial technologies that are very flexible and adaptable to challenges and changes. The purpose is to find out the nature and role of FinTech in overcoming systemic gaps and imbalances in the period of “contactless economy”; scientific substantiate the influence of the newest financial instruments on the change of the world financial order. Methods. Methods of dialectical, structural analysis and synthesis, as well as logical generalization, comparison and formalization, the method of scientific abstraction are used. Results. The systemic determinants of global financial instability are revealed. Emphasis is placed on new systemic risks and global challenges provoking global financial crises in the era of digital economy and digital financing. Methods of combating Covid-19 and systemic measures of individual governments in a pandemic are analyzed. The political, cultural and institutional differences of the world leaders are argued from centralized planning in China, which allows to act more decisively and more efficiently, to the liberalism of freedoms and democracy in the United States, which does not accept strict restrictions on freedoms. The objective preconditions and potential opportunities for reforming the world monetary system and global financial architecture in the era of transformation of the world financial order are argued and its main element – FinTech is emphasized. The necessity of forming a new neo-financial world order, which will be based on completely new principles and principles, has been proved. Perspectives. In further research it is planned to pay reasonable attention to the latest financial instruments on the change of the world financial order, to reveal the essence and role of FinTech in overcoming systemic gaps and imbalances in the period of “contactless economy”.

The COVID-19 pandemic makes us vividly aware of the major global imbalances and challenges that we collectively face today (Sakketa and Koebner, 2020; Sumner et al., 2020). As we witness too often,...

This paper studies the economic impacts of China–US trade tensions. A global value chains-augmented global vector autoregressive trade model that gauges the spatial and temporal dynamics of interna...

La cooperación monetaria en el contexto del sistema monetario internacional posterior a los Acuerdos de Bretton Woods es baja. Aunque el régimen de tipos de cambio flotantes prometía ajustes menos traumáticos que su predecesor, varios factores concurrieron para la obtención de resultados de signo contrario. La mayor flexibilidad de las políticas cambiarias de América Latina partir de los 2000, así como la acumulación de reservas externas, contribuyeron a sortear la crisis financiera global de manera más eficiente que los shocks exógenos del pasado. A nivel global, la acumulación de reservas alimenta el problema de los desequilibrios globales mientras que la existencia de una multiplicidad de acuerdos cambiarios torna el sistema monetario internacional en un universo complejo., Monetary cooperation in the context of the international monetary system following the Bretton Woods Agreements is low. Although the floating exchange rate regime promised less traumatic adjustments than its predecessor, several factors concurred obtaining opposite sign results. The greater flexibility of exchange rate policies in Latin America since the 2000s, as well as the accumulation of external reserves, helped to overcome the global financial crisis more efficiently than in past exogenous shocks. At the global level, the accumulation of reserves feeds the problem of global imbalance, while the existence of a multiplicity of exchange rate agreements makes the international monetary system a complex universe., Instituto de Relaciones Internacionales

We estimate a structural term‐structure model of U.S. real rates, where arbitrageurs accommodate demand pressures exerted by domestic and foreign official investors. Official demand affects rates by altering the aggregate price of duration risk, and thereby bond risk premiums. Although foreign central banks' demand contributed to reduce long‐term real rates mainly in the years prior to the global‐financial crisis, the Federal Reserve's demand lowered rates during the quantitative easing period. Overall, the two‐factor model, augmented to account for changing liquidity conditions, offers a good representation of real rates during the 2001–16 period; however, we flag some caveats and possible extensions.

The article presents the study results of the world trade stagnation issues associated with the WTO systemic crisis. The aim of the article is to summarize the main reasons for the world trade system disintegration and to identify feasible directions for the world economic order transformation. The G20 trade-restricting measures were analyzed based on the statistical databases of the WTO and the non-governmental organization Global Trade Alert (GTA). The views of leading domestic and foreign experts on the consequences of liberalization of the world trade in goods and services were summarized. The author systematized the reasons for the world trade system disintegration, including: the US anti-globalization policy aimed at containing the PRC; counteracting unipolar globalization by the Southeast Asian nations; developed countries’ rejecting the growing participation of developing countries in redistributing global resources; inefficiency of international organizations in solving problems of global imbalances, inequality and instability of the global financial system. Structuring disintegration processes revealed its main trends: protectionism, regionalism, trans-regionalism. There were shown mechanisms to keep the US in the European Union due to companies providing professional services to European business. The author evaluated Russia and China’s competitive advantages in the production chains of the new technological structure. The areas of cooperation between Russia and the BRICS countries for realizing export potential in agriculture, aviation and nuclear industries were determined. The prospects for trade and economic relations in Eurasia are discussed in terms of changing the economic paradigm and shifting the regulation of the global economy problems to the regional level.

Reading Marton Demeter’s bold and incisive book on global imbalances in knowledge production at the end of 2020, one feels its release was well timed to coincide with the heightened efforts to decenter academia beyond the White, male heterosexual from the Global North. (2020 was the year when the world witnessed large-scale protests against racial discrimination inspired by the Black Lives Matter Movement.) However, the book not only offers a fresh perspective into the center-periphery problem in academia, but it is a product of Demeter’s extensive empirical work into power relations in academia over the years. Indeed, this book richly documents “western exclusivism” and exploitation of the Global South. Its purpose is to serve as ammunition in sustaining epistemic resistances against racism and class inequalities perpetuated by higher education institutions in North America and Europe.

We use a sufficient statistic approach to quantify the general equilibrium effects of population aging on wealth accumulation, expected asset returns, and global imbalances. Combining population forecasts with household survey data from 25 countries, we measure the compositional effect of aging: how a changing age distribution affects wealth-to-GDP, holding the age profiles of assets and labor income fixed. In a baseline overlapping generations model this statistic, in conjunction with cross-sectional information and two standard macro parameters, pins down general equilibrium outcomes. Since the compositional effect is positive, large, and heterogeneous across countries, our model predicts that population aging will increase wealth-to- GDP ratios, lower asset returns, and widen global imbalances through the twenty-first century. These conclusions extend to a richer model in which bequests, individual savings, and the tax-and-transfer system all respond to demographic change.

This paper shows how a defective architecture for domestic and international payments has made it possible for banks to exploit the endogenous nature of money in a variety of purely speculative financial-market transactions that have led to the eruption of a global systemic crisis. I elaborate on a monetary–structural reform, which should make sure that no bank will any longer be in a position to blur the distinction between money and credit, as this confusion in the banks' books originates various asset bubbles as well as systemically important financial institutions, both of which are major contributors to making the system increasingly fragile as time goes by. This reform of domestic payment systems will not be enough to avoid so-called global imbalances at an international level. I therefore propose, in the spirit of Keynes, a structural reform of the international monetary system, arguing for the emission of a supranational money in settlement of every individual transaction between any two monetary spaces.

This paper revisits the period of substantial widening of external imbalances in advanced economies in the run-up to the global financial crisis and their adjustment since then. We take a granular look at these imbalances through the lens of their domestic counterpart: the net financial balance of the household sector, the government, non-financial corporations, and financial corporations. Our findings challenge the often-claimed view that the household sector lies behind most of the dynamics of the current account. In fact, we show that it is non-financial corporations and the government that account for the bulk of: (i) the co-movement with the standard set of fundamental covariates of the current account; (ii) the external adjustment and expenditure reduction in the aftermath of the global financial crisis; and (iii) the diverging dynamics during large and persistent current account imbalances. These results emphasize that analyzing domestic sectoral balances can lead to a better empirical and theoretical understanding of global imbalances.

Why do some countries run persistent current account surpluses? Why do others run deficits, often over decades, leading to enduring global imbalances? Such persistent imbalances are the root cause of many financial crises and a major source of international economic conflict. We propose that differences in wage-bargaining institutions explain a large share of imbalances through their effect on the trade balance. In countries with coordinated wage bargaining, wage growth in export industries can be restrained to ensure competitiveness, leading to persistent trade surpluses. We estimate the contribution of these institutions to trade balances in Organisation for Economic Co-operation and Development (OECD) member countries since 1977 and find ample support for our hypothesis. Contrary to much of the literature, the choice of fixed or floating exchange rate regimes has only a small effect on trade or current account balances. In other words, internal adjustment in surplus countries via wage-bargaining institutions trumps external adjustment by deficit countries.

We analyze the relationships between bubbles, capital flows, and economic activities in a rational bubble model with two large open economies. We establish a reinforcing relationship between global imbalances and bubbles. Capital flows from South to North facilitate the emergence and the size of bubbles in the North. Bubbles in the north in turn facilitate South-to-North capital flows. The model can simultaneously explain several stylized features of recent bubble episodes. (JEL E32, E44, F44, G01, G14, O16)

This study divides the world into currency zones according to the co-movement of each currency with the key currencies. The dollar zone groups economies that produce well over half of global GDP. The euro zone now includes almost all of Europe and some commodity producers, but remains less than half the size of the dollar zone. The dollar zone share has shown striking stability despite big shifts across zones over time. These include the demise of the sterling zone and the expansion of the DM/euro from northwestern Europe to Europe and beyond. Global imbalances look very different from a currency perspective. In the 2000s, the dollar zone’s current account improved and became more or less balanced around the time of the Global Financial Crisis (GFC), even as the US current account plumbed all-time lows. The dollar zone’s net international investment position was also balanced around the time of the GFC. Thus, neither flow nor stock readings on the dollar zone support widespread predictions in the early 2000s of an imminent dollar crash. In fact, most of the secular widening of current accounts occurred within currency zones, where by construction investors bear relatively limited currency risk. Our account of the dollar’s dominance rests not on the US economy’s size but rather on the size of the zone with limited currency risk vis-a-vis the dollar. In such a world, the rise of another large economy poses the question not of relative size but rather of re-alignment of third currencies. What if the renminbi becomes a key currency alongside the dollar and the euro? Already some emerging market currencies are co-moving with the renminbi against the dollar. On current evidence, a renminbi zone would shrink the dollar zone, and widen its current account deficit.

Which policies are protectionist and which ones are not? The Lerner Symmetry Theorem establishes that import tariffs and export taxes are equally protectionist. In this paper we provide a modern treatment of this classical result, highlighting the importance of multinational firms, global imbalances, and imperfect competition. Under perfect competition, the result follows from the separability of consumption and production across countries, ruling out tourism and some forms of multinational firms, but not others. Though we do not require trade balance, the role of initial assets is subtle: our result rules out foreign ownership of domestic assets, but does not constrain domestic ownership of foreign assets. Under imperfect competition, our result effectively rules out all multinational firms. We conclude by discussing the implications for border adjustment taxes. (JEL D41, D43, F13, F14, F23)

Global economic and financial crisis 2007–2009 had a devastating effect on international capital flows. An assessment of their dynamics over the past decade shows that in certain fields (for example, the volume of international debt securities circulating) the pre-crisis indicators were exceeded, in a number of areas they are close to the pre-crisis level (foreign direct investments, total capitalization of the world stock market), international bank lending remains significantly behind the pre-crisis values. In the leading world economies cross-border capital flows relative to GDP significantly decreased compared to 2007. Global imbalances between savings and investments continued to grow, though their structure by countries changed, and now developed countries play a key role in them. In the structure of international capital flows the main shift occurred from the other to portfolio investment, with a slight increase in the role of direct investment. The “quantitative easing” policy in the USA and euro zone has had a significant impact on international capital flows. With generally positive trends in international capital movements in 2017–2018, new threats to their developments are beginning to emerge, primarily in countries with emerging markets.

We study the effect of collateralized lending and securitization on the global supply of securitized assets, welfare, and international net and gross capital flows in a two country general equilibrium model with idiosyncratic investment risk. The financial sectors in the two countries, Home and Foreign, differ by the collateral requirement for investment loans, with Home requiring lower margins. In autarky, Home endogenously supplies more assets and enables more risk sharing. Upon financial integration, capital flows from Foreign to Home, leading to lower interest rates and an increase in the global supply of assets. Foreign enjoys substantial welfare gains through better risk sharing and portfolio reallocation, while the welfare experience for Home is ambiguous. Gross capital flows arise when agents face aggregate shocks to the expected payoff to investment projects, but can collapse when shocks concern the variance of returns.

We study a monetary economy with two large open economies displaying net real and financial flows. If default on cross-border loans is possible, taxing financial flows can reduce its negative consequences. In doing so it can improve welfare unilaterally, in some cases in a Pareto sense, via altering the terms of trade and reducing the costs of such default.

In this article, we aim to contribute to the debate on global imbalances by assessing whether China’s current account surplus is persistent in the long run by examining the mean-reverting property ...

With Donald Trump as President of United States, multilateralism in the world economy is facing an unprecedented challenge. The international economic institutions that have evolved since the fifties are increasingly under the risk of being undermined. With the growing assertion of the emerging and developing economies in the international fora, United States is increasingly sceptical of its ability to maneuvre such institutions to suit its own purpose. This is particularly true with respect to WTO, based on “one country one vote” system. The tariff rate hikes initiated by the leader country in the recent past pose a serious challenge to the multilateral trading system. The paper tries to undertake a critical overview of the US pre-occupation of targeting economies on the basis of the bilateral merchandise trade surpluses of countries, through the trade legislations like Omnibus Act and Trade Facilitation Act. These legislations not only ignore the growing share of the United States in the growing invisibles trade in the world economy, but also read too much into the bilateral trade surpluses of economies with United States and the intervention done by them in the foreign exchange market.

This article assesses the scope for economic recovery following the COVID-19 shock. A theoretical review looks at the interplay between the forces of aggregate demand and income generation, on the ...

Relevance of the topic researched. The system of the world economy is heterogeneous, represented by countries of different levels of institutional and economic development, and therefore, its functioning leads to significant imbalances – deficits and surpluses in balance of payments. The presence and constant reproducibility of global imbalances characterizes the world economy as a system of redistribution of economic resources and incomes in favor of a narrow range of countries with developed markets. The purpose of this research. The research is devoted to the analysis of the nature and macroeconomic consequences of global imbalances, understanding the potential of the government’s regulatory policy to minimize external and internal economic imbalances of the country. Methodology. The study is based on the philosophical and theoretical heritage of the classical school of economics and macroeconomic concepts of modern neoliberalism. Analytical tools are presented by theoretical models and statistical data. Results. The paper argues that the imbalance of the modern world economy and the problems of macroeconomic regulation are rooted in dynamic globalization and the resulting change in the position of countries in world markets, as well as in the established division of national economies as open systems into large and small economies. The analysis focuses on the structural problems of national economies: the imbalance between gross domestic disposable income and aggregate domestic expenditures, between national savings and gross domestic investment, and the financial problems of the state itself. Attention is paid to the peculiarities of the functioning of the global financial market and its role in strengthening imbalances. Conclusions. Reasonable conclusions that the participation in global markets of countries with developed domestic markets and weak countries with quasi–markets has the following consequences: 1) almost synchronous coexistence of significant trade deficits in some countries and significant surpluses in the balances of others; 2) developed countries enjoy the privilege of capitalizing on foreign savings; 3) countries with raw material economies suffer the most, in particular Ukraine ("price scissors" and debt bondage). Practical meaning. The obtained results have theoretical–cognitive and educational significance.

This chapter retraces Keynes’s way of reasoning on measure and on the role of tragic irreducible conflicts and dilemmas in his approach to international relations. The chapter shows how Keynes’s approach is a constant from his early Indian Currency and Finance (1913) to the General Theory and on to his Plan for Bretton Woods, the Clearing Union and his 1945 Memorandum. It also devotes great attention to the concept of the ‘fear of goods’ (a concept which stands for the love of money); a concept that Keynes borrows from mercantilism and he uses against mercantilist practices. This chapter again shows Keynes’s anti-utilitarian attitude and his dislike for the hoarding of money. Keynes is a moral scientist, a promoter of happiness scathingly critical of the love of money. The final part of the chapter is devoted to the current discussion on global imbalances and the euro-zone and to what Keynes would have proposed to overcome these global imbalances and the conditions for their reduction, had he been alive today.

The article considers methods of overcoming global imbalances in the world economy in the context of exacerbation of the socio-economic crisis. The definition of the concept of global imbalances formulated and their classification was covered. The article highlights the periodicity of global financial imbalances and global imbalances that affect macroeconomic development. It is determined that in recent decades, global economic development has undergone several economic crises that have created global imbalances in world trade and redistribution of capital and resources of national economies. The G20 premier forum for international economic cooperation must form a list of recommendation that every country should follow in order to overcome global imbalances. In addition, analyzed that all this is happening in the context of the slow growth of world trade since the global financial crisis of 2008 and the recovery of the world's economies from the shock caused by the spread of the COVID-19 epidemic. The article highlights the US deficit relative to gross domestic product and identifies its impact on the structure of global imbalances. It highlights how the US current account deficit affects the formation of current local imbalances between national economics. It analyzed that 2020 was a stage of economic collapse, similar in nature to the Great Depression of the 1930s. In the article was determined that global imbalances are the compound of deficits and surpluses on the current account. It is determined that the significant decline in international trade during the period 2020-2021 caused by the effects of the COVID-19 pandemic. It is determined that the new economic uncertainty is reflected in world capital markets in general and in international financial markets, in particular, in the volatility of capital flows to the economies of developing countries. The paper highlighted measures to support the countries most affected by COVID-19, as an example of cooperation in reducing today's global imbalances. All the above aspects formed and described in the following article with reasonable considerations and supplemented by examples of factual data.

This paper examines the role of the quality of institutions, financial development and FDI on current account imbalances, which narrowed during the Global Financial Crisis. In doing so, we utilize (i) a sample of 49 advanced and emerging economies during 1984&ndash, 2014, (ii) a novel three-clustered indices of institutional quality and (iii) two measures of financial development, the share of FDI and a measure of financial crisis in addition to standard determinants of the current account. We find that the better the quality of institutions and the greater the financial development, the larger are current account deficits, meanwhile, FDI contributes to boost current account balances. Moreover, financial crisis episodes tend to improve current account balances, particularly for countries that are highly open to trade and to receive FDI, as in the case of advanced economies and East Asian countries.

We study the role that changes in credit and fiscal positions play in explaining current account fluctuations. Empirically, the current account declines when credit increases, and when the fiscal balance declines. We use a two-country model with financial frictions and fiscal policy to study these facts. We estimate the model using annual data for the U.S. and “a rest of the world” aggregate that includes main advanced economies. We find that about 30 percent of U.S. current account balance fluctuations are due to domestic credit shocks, while fiscal shocks explain about 14 percent. We evaluate simple macroprudential policy rules and show that they help reduce global imbalances. By taming the financial cycle, macroprudential rules that react to domestic credit conditions or to domestic house prices would have led to a smaller and less volatile U.S. current account deficit. We also show that a countercylical fiscal policy rule that stabilizes output growth reduces the level and volatility of the U.S. current account deficit.

Фінансово-економічна система в останні роки, а особливо під впливом пандемії зазнає кардинальних змін. Тому, дослідження структурних змін, що відбуваються як в економіці в цілому, так і в окремих її складових елементах, ідентифікація дисбалансів та їх вплив фінансово-економічну систему були та залишається актуальними. The financial and economic system has undergone drastic changes in recent years, especially under the influence of the pandemic. Therefore, the study of structural changes occurring both in the economy as a whole and in its individual constituent elements, identification of imbalances and their impact on the financial and economic system were and remain relevant.

This chapter analyzes the various costs for other countries and the risks to global financial stability associated with the current dollar-dominated international financial system. Discussion focuses initially on the volatility of international capital flows that can be identified with the global financial cycle and private traders’ responses to changes in Federal Reserve policy. The chapter also considers the costs for emerging market economies of accumulating US government debt securities (“safe” assets) as a self-defense mechanism against capital flow volatility because of defects in the Global Financial Safety Net. The chapter closes with a discussion of the problem of global imbalances and the absence of an institutional mechanism to reduce these as a threat to global financial stability.