Publication

This paper explores the causes of the transpacific trade imbalances using an empirical global model. The authors discuss implications and policy challenges of the trade and financial imbalances and the effects of adjustment policies. They find that the cause of trade imbalance from 1997 to 2004 is changes in saving-investment gaps attributed to the surge of the US fiscal deficits and the decline of East Asia's private investment after the 1997 financial crisis.