G20 and Global Imbalances

It is nice when world governments act so quickly to illustrate the processes we discuss in class. Last Thursday we focused on macroeconomic policy coordination as a solution to global current account imbalances. The Group of 20 met this weekend in South Africa and agreed the following:

"We also agreed that an orderly unwinding of global imbalances, while sustaining global growth, is a shared responsibility involving: steps to boost national saving in the United States, including continued fiscal consolidation; further progress on growth-enhancing reforms in Europe; further structural reforms and fiscal consolidation in Japan; reforms to boost domestic demand in emerging Asia, together with greater exchange rate flexibility in a number of surplus countries; and increased spending consistent with absorptive capacity and macroeconomic stability in oil-producing countries."