Living with Global Imbalances

Richard N. Cooper

RNC

Richard N. Cooper

OVER THE YEARS, the Brookings Panel has focused overwhelmingly on
the U.S. economy. That emphasis reflected the principal interests of its
founders, Arthur Okun and George Perry. The United States is by far the
largest economy in the world, accounting for a quarter to a third of
global output, so understanding the U.S. economy is important. And this
economy is rich in data. But that still leaves over two-thirds of the world
economy. The Brookings Papers has made excursions into this area
from time to time. At various points Europe, Japan, and most recently
China have been addressed. There was a flurry of interest in the transition
economies some years ago, in the international financial crises of
the mid- to late 1990s, and more rarely in developing countries more
broadly.
The U.S. economy and the economies of the rest of the world intersect
through international transactions. These have received more attention in
the Brookings Papers, although again largely with a U.S. focus. I will
address this intersection with respect to the large global imbalances that
exist today, although I will deviate from the usual practice here by adopting
a rest-of-the-world rather than a U.S. perspective.