Large and persistent global financial imbalances need not be the harbinger of a world financial crash. Instead, we show …

the rest of the world cannot explain the U.S. current account deficits, especially in the 1980s and the 2000s. This is … because on a GDP- weighted basis, the rest of the world actually had higher productivity growth during these periods, and … standard macroeconomic models would predict an outflow of funds from the U.S. to the rest of the world, and a consequent U …

led to its spread to the rest of the world. On the theoretical side, we show that capital flows to the United States in …

and Structure Database of the World Bank are employed, namely: financial depth (money supply and liquid liabilities … Financial Development and Structure Database of the World Bank. …