Global imbalances on a snowy day
It's a big snow day here in the Northeast. The kids are home and I'm on duty to make sure nobody kills each other.
But you don't want to know about domestic life at the Glut house. You want to know what's next for the global economy. On that very topic, I am currently digesting a very interesting (and mercifully short!) paper by Ricardo Hausmann and Federico Sturzenegger on the US current account deficit titled "U.S. and global imbalances: Can dark matter prevent a big bang?".
Their argument is especially interesting to me not so much because they poo-poo folks like Brad Setser and Maurice Obstfeld (with whom I largely agree) on global imbalances. I am more interested in their possible contribution to an explanation of how world cities -- London and New York especially, but many others besides -- manage, promote and sustain dramatic and increasingly unequal exchange between themselves and the rest of the world.
So that's what I'm thinking about on this snowy day somewhere in America. If you've read the piece, I'm keen to hear what you think. I'll be pondering it today while I dig out the car and shovel my walk.