Global imbalances emerged as a hot topic before and after the 2008 financial crisis when wide gaps between surplus and deficit economies were seen as an important macroeconomic backdrop to the crisis. They persist today. As Macron observed at the World Economic Forum in Davos, these excessive imbalances arise from ‘American overconsumption, Chinese underconsumption and overinvestment, and European underinvestment and lack of competitiveness.’ Remarkably, Macron’s assessment, verbatim, would have been spot on 20 years ago. The G7, G20 and International Monetary Fund have not ignored global imbalances over the last two ... (full story)