International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

East Asia and Global Imbalances: Saving Glut Economies Perspectives

The global economy is suffering from serious imbalance characterized by a deterioration of the US deficit in current account. At the same time, the East Asia major economies such as China, Japan or ASEAN, and also oil exported countries, as so called Global Saving Glut economies, are also suffering from serious imbalance in the opposite way. International capital flows run in opposite direction to the economic theory might suggest, from poor Asia economies to rich country like US, in order to finance US trade deficits. Causes of the problem under the cross country free flow of capital environment at present seem to base on the famous Feldstein-Horioka puzzle, of which the relation between saving-investment in theory does not go along with empirical evidences. This puzzle sparks an immense literatures and arguments since it is a central issue in international macroeconomics. The purpose of this paper tries to explore and explain in the angle of GSG economies by using the Feldstein-Horioka findings as a framework for the global imbalance issues.

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