Research On Current Account Imbalances Based On The Financial Development

In the21st century, global economic imbalances have been growing. The mainperformance is current account deficit of US is huge and its debt has grown rapidly, whileoil-exporting countries, China, Japan and other Asian emerging market countries hold largetrade surplus for the United States, these countries’ current account surplus continue to expand.Global economic imbalances have become a potential threat to healthy development of theworld economy. If harmonization measures are not taken in place, the dollar devaluationwhich is leaded by the trade deficit will impact on the world economy seriously.From the perspective of macroeconomic and financial development theory, we analyzethe causes of the current account imbalances and its influencing factors. Then we conducte astatistical description of the status of global current account imbalances. By using60samples’countries and regions and their annual data from1986to2010, and by using GMM dynamicpanel estimation model (GMM) methods to explore the relationship between current accountimbalances and their impact factors. Using Eviews7.1measurement software, from amacroeconomic point of view, while focusing on the level of financial development andfinancial openness on the impact of current account imbalances.Through these studies made the following policy recommendations:(1) Developingcountries should increase budget surplus and net foreign assets, improve terms of trade,enhance the activity and efficiency of financial market to improve their current account. Whileincrease per capita income, stimulate consumer demand and investment, expand financialmarket size will cut down excess of current account surplus;(2) Real and effective exchangerates will not impact on current account significantly, which means the appreciation ordepreciation of currency cannot change the imbalance of the current account.