Cooper, Richard N.2017-08-172017-08-172009https://hdl.handle.net/10986/27935This paper argues that global imbalances in current account positions are a natural consequence of globalization of financial markets and of demographic trends, particularly in Europe and in East Asia. Those societies are aging rapidly, with declining numbers of young adults. On both counts savings should be high and investment weak, resulting in excess saving. With globalization of capital markets, this excess saving will naturally seek secure investment opportunities abroad. The U.S. economy, where demographic trends are markedly different (due in part to immigration of young adults), offers a good combination of yield, liquidity, and security for this excess savings, which in time will be liquidated to finance consumption in old age. Thus the large 'imbalance' does not obviously reflect disequilibria in the world economy, but rather a current phase of intertemporal trade.en-USCC BY 3.0 IGOACCOUNTINGASSETSBALANCE OF PAYMENTSBALANCE SHEETSBONDSBUDGET DEFICITSCAPITAL GAINSCAPITAL GAINS ON EQUITIESCAPITAL INVESTMENTCAPITAL MARKETCAPITAL MARKETSCAPITAL OUTFLOWCAPITAL STOCKCENTRAL BANKCENTRAL BANKSCOMPARATIVE ADVANTAGECONSOLIDATIONCONSUMER CREDITCONSUMER DURABLESCONSUMERSCORPORATE SAVINGSCURRENCYCURRENCY APPRECIATIONCURRENCY APPRECIATIONSCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSCURRENT ACCOUNT POSITIONSCURRENT ACCOUNT SURPLUSCURRENT ACCOUNT SURPLUSESDEBTDEBT INSTRUMENTSDEBT OBLIGATIONSDEBTORDEMOGRAPHICDEMOGRAPHIC CHANGEDEPRECIATIONDERIVATIVESDEVELOPING COUNTRIESDEVELOPING COUNTRYDIRECT INVESTMENTDISTRIBUTION OF WEALTHDIVIDENDSDOLLAR VALUESDOMESTIC DEMANDDYNAMIC ECONOMYECONOMIC ASSUMPTIONSECONOMIC DOWNTURNECONOMIC GROWTHECONOMIC RECESSIONECONOMIC RESEARCHECONOMIC SIZEENVIRONMENTAL BENEFITSEQUIPMENTEQUITY INVESTMENTEXCHANGE RATEEXCHANGE RATE MOVEMENTSEXPENDITUREEXPENDITURESEXPORT DIVERSIFICATIONEXPORTSEXTERNAL INDEBTEDNESSFACTORS OF PRODUCTIONFEDERAL BUDGETFEDERAL RESERVEFINANCIAL ASSETSFINANCIAL CLAIMSFINANCIAL CRISESFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL INTERMEDIARIESFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SYSTEMFISCAL CONSOLIDATIONFISCAL POLICIESFISCAL POLICYFIXED CAPITALFLOW OF FUNDSFOREIGN ASSETSFOREIGN CAPITALFOREIGN CLAIMSFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETSFOREIGN FUNDSFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN INVESTORSFOREIGN OWNERSHIPGDPGLOBAL IMBALANCESGLOBALIZATIONGOVERNMENT DEFICITSGOVERNMENT REVENUEGRAVITY MODELGRAVITY MODELSGROWTH THEORYHIGH CAPITAL MOBILITYHOME COUNTRIESHOME CURRENCIESHOME EQUITYHOME EQUITY LOANSHOUSEHOLD SAVINGSIMBALANCEIMPORTIMPORT DEMANDIMPORTSINCOME STREAMINCOMESINDEBTEDNESSINSTITUTIONAL ARRANGEMENTSINTANGIBLEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL COMPETITIVENESSINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINTERNATIONAL INVESTMENTINVESTINGINVESTMENT EFFICIENCYINVESTMENT INCOMEINVESTMENT OPPORTUNITIESINVESTMENT RATESJUDGEJUDGMENTKNOWLEDGE ECONOMYLABOR FORCELIQUIDITYLOW-INCOME COUNTRIESMACROECONOMIC POLICYMAJOR CURRENCIESMANDATEMARKET EXCHANGE RATESMARKET VALUEMARKETABLE SECURITIESMONETARY AUTHORITIESMONETARY POLICYMORTGAGEMORTGAGE LENDINGMORTGAGESNATIONAL ECONOMIESNATIONAL SAVINGNATIONAL SAVINGSNATURAL RESOURCESNEW PRODUCTSOIL EXPORTERSOIL PRICESOTHER CURRENCIESOUTPUTOUTSTANDING CLAIMSPASSIVE INVESTORSPAYMENTS CRISESPENSIONPER CAPITA INCOMEPER CAPITA INCOMESPORTFOLIOPORTFOLIO EQUITYPOVERTY REDUCTIONPRIVATE CAPITALPRIVATE INVESTMENTPRIVATE SAVINGPRODUCTIVE INVESTMENTPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC DEFICITPUBLIC PENSIONPUBLIC SAVINGRAPID ECONOMIC GROWTHRAPID GROWTHREAL EXCHANGE RATESRECESSIONREMOTE LOCATIONRETIREMENT AGERETURNRETURNSRISK AVERSERISK AVERSIONRISK EQUITYSAVINGS RATESSECURITIESSETTLEMENTSLOWDOWNSTOCKSSURPLUSTECHNOLOGICAL CHANGETRADE DEFICITTREASURYTREASURY SECURITIESUNCERTAINTYUNFUNDED PENSIONVALUATIONVALUATION CHANGESVALUATIONSVOLATILITYWORLD ECONOMYWORLD FINANCIAL MARKETSWorking PaperWorld Bank10.1596/27935