Our study shows that China could contribute to an orderly global rebalancing by a package of policies to stimulate its domestic consumption. These policies include a progressive appreciation of RMB, fiscal stimuli of increasing social expenditures on education, healthcare, social safety net and...

Rebalancing the large U.S. trade deficits could take different paths. Based on model simulations, the paper shows that if rebalancing is based solely on a sharp cut in the U.S. domestic demand, a recession will be inevitable for the U.S. economy, and the adverse impact for the global economy...

Policymakers worldwide are primarily concerned about the sustainability of the global imbalances and the implications for the stability of the world economy, but they have not paid enough attention to the implications of the imbalances for the equity and efficiency of the resource allocation...