The aim of the study is to investigate the influence of changes in international investment risk perception on the growth of GDP in fixed and free-floating exchange rate regimes. In the analyses I used Mudell-Fleming model - a workhorse of open economic macroeconomics. The calculations indicate that in the case of increasing international investment risk countries with fixed exchange rates are exposed to the slowdown of the dynamic of GDP growth more than the countries with free floating exchange rate.
The aim of the study is to present major opinions concerning the phenomenon of global imbalances and its influence on stability of global economic growth. The author tries to systematize both concepts presented by economists prior to the world financial crisis and current views on the relationship between global imbalances and the financial crisis. The article contains also selected forecasts of the future development path of global imbalances and resulting recommendations for policy makers given by selected economists. The analysis of the world literature has helped the author to formulate two conclusions: 1) There are competing opinions on the role of global imbalances in terms of sustainable growth of the world economy (expressed both before and after the outbreak of the financial crisis; 2) There is a widespread belief among economists that global imbalances will persist in the future. Both conclusions are arguments for further research on the issue of global imbalances.
The are some minimal surpluses of international financial flows (on the capital and reserve account) that are needed to support critical payment deficit at the previous level in the next period. If the amount of critical deficits is in excess over the total accessible surplus of international capital flows, it inevitably leads to a violent and forced correction of the current account and serious disturbances of the growth process. The breakdown of financing of payment deficit in emerging economies, partly may result from weaknesses of operations of regulating institutions that do not have sufficient influence on behaviours and attitudes of subjects participating in foreign capital turnovers. It requires however an appropriate recognition of the strength and nature of the reaction and behaviours of national subjects interacting with a strategy of domestic regulatory institutions.
This paper describes an attempt to analysis factors that contribute to the rise of the external imbalances in domestic economy, namely: debt crises, volatility fluctuations of capital flows and diminishing predictability of international solvency. None of these factors fully explain the all reasons of escalation of external disequilibrium. Only researching them in an integral relation allows for better understanding of the escalation processes of external imbalances in particular countries. An acquaintance with these processes is the efficiency condition for the adjustment activities to stabilize capital flows and stop the escalation of external disequilibrium in domestic economy.
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