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Macroeconomic Imbalances in the United States and their Impact on the International Financial System

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Minsky, Crisis and Development

Abstract

While most economies grow through investment or export which expands demand, the US economy has kept up its growth by increased consumption. Using its privileged position to borrow money, the United States has reached a historically unprecedented level of current account deficit, which has been followed by a debt crisis in 2007–2008. This chapter argues that the financial crisis of 2007–2008 is symptomatic of macroeconomic imbalances in the United States, because the imbalances eventually are resolved in financial markets, and passed on to the real economy. On the other hand, the international financial system is dependent on US trade deficits for feeding liquidity into financial and commodity markets.

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Authors
  1. Julia S. Loe
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Editor information

Editors and Affiliations

  1. School of Oriental and African Studies, University of London, UK

    Daniela Tavasci (PhD in Economics and is Teaching Fellow) & Jan Toporowski (Reader in Economics and Chair of the Economics Department, Research Associate, Senior Member) (PhD in Economics and is Teaching Fellow) &  (Reader in Economics and Chair of the Economics Department, Research Associate, Senior Member)

  2. Research Centre for the History and Methodology of Economics, University of Amsterdam, Netherlands

    Jan Toporowski (Reader in Economics and Chair of the Economics Department, Research Associate, Senior Member) (Reader in Economics and Chair of the Economics Department, Research Associate, Senior Member)

  3. Wolfson College, University of Cambridge, UK

    Jan Toporowski (Reader in Economics and Chair of the Economics Department, Research Associate, Senior Member) (Reader in Economics and Chair of the Economics Department, Research Associate, Senior Member)

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© 2010 Palgrave Macmillan, a division of Macmillan Publishers Limited

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Loe, J.S. (2010). Macroeconomic Imbalances in the United States and their Impact on the International Financial System. In: Tavasci, D., Toporowski, J. (eds) Minsky, Crisis and Development. Palgrave Macmillan, London. https://doi.org/10.1057/9780230292321_8

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