Global Fiscal Adjustment and Trade Rebalancing

摘要

Two pressing economic issues facing the world economy are the need for fiscal consoli-dation in most major advanced economies and the ongoing need for more spending on infrastructure in emerging countries to support growth (see Lee, 2010; Limao and Venables, 2001; Roberts and Deichmann, 2009). While each issue has separate origins, resolving each affects the other. This asymmetric world fiscal policy adjustment has implications for global growth, trade balances and capital flows and is the focus of this paper.