The two crises of international economics
By: Michael P. Dooley, Peter M. Garber, David Folkerts-Landau.
Contributors: Garber, Peter M.; Folkerts-Landau, D. F. I. 1949-; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13197.; Working paper series (National Bureau of Economic Research) -- working paper no. 13197.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Subjects: International economic relations
Description: "In this essay, we argue that key assumptions in international macroeconomic theory, though useful for understanding the economic relationships among developed countries, have been pushed beyond their competence to include relationships between developed economies and emerging markets.  The Achilles heel of this extended development model is the assumption that threats to deprive the debtor countries of gains from trade provide incentives for poor countries to repay more than trivial amounts of international debt.  Replacing this assumption with the idea that collateral is required to support gross international capital flows suggests that the pattern of current account balances seen in recent years is a sustainable equilibrium"--National Bureau of Economic Research web site.
Notes: "June 2007"

Includes bibliographical references.

Also available in PDF from the NBER world wide web site (www.nber.org).