Author: Yilmaz AkyuzPublisher: Orient BlackSwanYear: 2012Language: EnglishPages: 216ISBN/UPC (if available): 9788125047933
Financial Crisis and Global Imbalances examines—from a standpoint of promoting stability and growth in developing countries—key policy lessons to be drawn from the devastating global economic crisis of 2008–09. The crisis has exposed deep faultlines in the world economy which increase its susceptibility to instability and crises. A major overhaul of the international financial system is needed in order to reduce the likelihood of virulent crises and manage them better if they do occur. This calls for, among others, fundamental reforms to establish multilateral discipline over monetary and financial policies in systemically important countries, to bring systematically important financial institutions and cross-border capital flows under control, and to involve the private sector in crisis revolution.Reducing the likelihood of future turmoil also requires that the gap in demand between surplus and deficit countries be bridged, and the skewed income distribution between capital and labor rebalanced.In this collection of papers on the 2008–09 Great Recession and its implications, leading economist Yilmaz Aküz underlines the need for economic restructuring along the above lines with a view to more effective crisis prevention and intervention. Given their vulnerability to shocks and limited capacity to respond, he says, this reform process is an endeavor in which developing economies have a crucial interest.
ContentsIntroduction1. Policy Response to the Global Financial Crisis: Key Issues for Developing CountriesIntroductionPolicy Response in DEEs: Payments Constraint and International SupportReform of the International Financial ArchitectureSummary of Policy Conclusions and Proposals2. Global Economic Prospects: The Recession May Be Over But Where Next?Issues at stakeBubbles, expansion and imbalancesCrisis, recession and recoveryNo return to “business as usual” - Need for US adjustmentChina too needs to adjust, but it cannot be a global locomotiveBringing in the bystanders: Germany and JapanExchange rate adjustmentsRemoving the deflationary bias in the international financial architectureConclusions3. Export Dependence, Sustainability of Growth and Adjustment in ChinaIntroductionMeasurement of contribution of exports to economic growthImport Content of ExportsTo what extent is growth in China export-led?4. The Subprime Boom-Bust Cycle and Capital Flows to Developing CountriesIntroductionPrevious post-war boom-bust cyclesCapital flows in the 2000sThe changing nature of capital flowsChanging vulnerabilities to boom-bust cyclesThe impact of recent capital flows on DEEsWhat is next?Managing capital inflowsConclusions5. Why the IMF and the International Monetary System Need More Than Cosmetic ReformIntroductionThe IMF’s failures in financial analysis and early warningIMF surveillance and members’ obligationsThe international reserves systemCrisis intervention and lendingConclusions