Post-crisis Scenarios (Mello, Padoan and Rousová)

Are Global Imbalances Sustainable?: Shedding Further Light on the Causes of Current Account Reversals by Luiz de Mello, Pier Carlo Padoan and Linda Rousová , published by OCDE. This paper assesses the sustainability of global imbalances. They find that the external positions of these major countries-regions are stationary around structural breaks, which define episodes of current account reversals. On the basis of an event analysis of past reversals, it appears that structural breaks are associated with shifts in the fiscal stance, exchange rate parities and potential output growth…