A1 - Agnès Bénassy-Quéré
A1 - Benjamin Carton
A1 - Ludovic Gauvin
TI - Rebalancing Growth in China: An International Perspective
IS - 2011-08
T3 - Working Papers
KW - Global imbalances
KW - capital controls
N2 - Based on simulations of an original DGE model of the US, Chinese and Euro area economies with financial frictions and various monetary regimes, the paper shows that the contribution of China in global rebalancing should primarily rely on structural policies aiming at reducing aggregate savings in China. The role of the exchange-rate regime would be minor under standard monetary policies, although more important if monetary policies in advanced countries are constrained, as they are today. Finally, relying only on a change in China’s monetary regime (without structural reforms) could end up in delaying rather than accelerating the rebalancing, depending on China’s policy regarding accumulated reserves.
ER -