The costs of rebalancing the China-US co-dependency

Name: The costs of rebalancing the China-US co-dependency
Brand: Vita e Pensiero
Price: 6.00 EUR
Availability: OnlineOnly

digital

Article

Magazine

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI

Issue

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2012 - 1

Title

The costs of rebalancing the China-US co-dependency

Authors

Luigi Bonatti, Andrea Fracasso

Publisher

Vita e Pensiero

Format

Article |

Pdf

Pages

Online from

01-2012

Issn

0035-676X (print) | 1827-7918 (digital)

€ 6.00

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Description

ABSTRACT
The global crisis has revived the growth-rebalancing debate, backing the position of those advocating a fast reduction of the imbalances between the US and China. By means of a two-country two-stage growth model reproducing the main qualitative features of the Sino-American co-dependency, we analyze alternative (medium- and long-term) scenarios for its evolution. We show that altering the Chinese exchange rate policy and down-sizing the US external deficits with a view to moving the production of tradables toward the US may imply relevant costs: the emergence of structural unemployment in the US and a slow-down in the process whereby the Chinese labor force is gradually absorbed in the modern sectors of the economy.

KEYWORDS: growth-rebalancing, global imbalances, structural unemployment.

JEL Classification: E42, F33, F41, F43, O41.