A Mystery of the Global Surplus and its Ramification

• Main Author: Marko G Malovic
• Format: Article
• Language: English
• Published: Economics institute, Belgrade 2013-07-01
• Series: Industrija
• Subjects: Transfer pricing; Trade; Globalization; Balance of payments imbalances
• Online Access: http://aseestant.ceon.rs/index.php/industrija/article/view/4136

<!--[if gte mso 9]><xml> <o:OfficeDocumentSettings> <o:RelyOnVML /> <o:AllowPNG /> </o:OfficeDocumentSettings> </xml><![endif]--> <p class="MsoNormal" style="text-align: justify;"><em style="mso-bidi-font-style: normal;"><span style="font-size: 10.0pt; line-height: 115%; font-family: &quot;Arial&quot;,&quot;sans-serif&quot;;">This paper deals with phenomenon of the increasingly indicative global imbalances and lagging genesis of balance of payments (BoP) accounting in an attempt to accommodate the ongoing mutation of international trade and finance. Namely, although BoP of the world as a whole should be zero since international trade in goods, services and financial assets ought to be a zero-sum game, our planet apparently runs a non-negligible and rising BoP surplus, projected to reach 1% of global GDP by 2015! To make the puzzle more bizarre, IMF statistics up until 2004 had recorded a persistent BoP deficit for the entire globe, which P. Krugman dubbed “The Mystery of the missing Surplus”. Well, surplus is back with the vengeance – while this paper tries to make sense of the phenomenon and pinpoint both its determinants and likely economic consequences. 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