Proposal preview

Global Imbalances and the Burden of Adjustment in Historical Perspective

At the Bretton Woods meeting in 1944 to design the international monetary system, the United States managed to scupper Keynes’ proposal for symmetric penalties on surplus and deficit countries in the pursuit of global balance. Expecting to be in balance of payments surplus, the US ensured that the onus of adjustment would be on deficit countries. Yet by the early 1960s, the US position deteriorated and American negotiators began to struggle to force countries with current account surpluses (and corresponding US deficits) to appreciate their currencies or otherwise adopt expansionary policies. This tension between persistent surplus and deficit economies has persisted despite liberalisation of capital flows and greater flexibility in exchange rates. This session will examine historical instances of such policy debates and disagreements between deficit and surplus countries from among the following:

• The early 1920s, when France and the US enjoyed BOP and current account surpluses, vitiating the adjustment process by sterilizing reserve inflows
• The late 1960s, when the US tried to engineer revaluations of surplus countries’ currencies, notably the German Mark and the Japanese Yen.
• The mid-1970s, when the US pushed for capital account liberalization, in part to appreciate the currencies of surplus countries.
• The mid-1980s, when the US negotiated voluntary export restraints with Japan, and engaged in coordinated FX intervention to “appreciate non-dollar currencies” at the Plaza Agreement.
• The mid-2000s, when the US sought an appreciation of the Chinese Renminbi to reduce China’s current account surplus with a view to reducing the US’ deficit.
• The current debate in Europe on whether Germany should undertake fiscal stimulus, inter alia to appreciate its real exchange rate and ease the burden of adjustment on Euro-area periphery countries.

Papers/presentations will seek to study these episodes from the perspectives of both the deficit and surplus countries and, in particular, will examine the extent to which political considerations influenced the choice of economic policies; the role of multilateral institutions and fora (G10, IMF, EC Commission); the outcome of the debate; and the eventual resolution of the imbalances.

We propose to have an open call for papers and a pre-conference to include as many participants as possible.


  • Catherine R Schenk, University of Oxford,,
  • Atish Ghosh, International Monetary Fund,,

Session members

  • Harold James, Princeton University,
  • Laure Quennoelle-Corre, Ecole des Haute Etudes en Sciences Sociales,
  • Kazuhiko Yago, Waseda University,
  • Michael Bordo, Rutgers University,
  • Catherine Schenk, University of Oxford,
  • Greg Chin, York University, Toronto,

Proposed discussant(s)

  • Atish Ghosh, International Monetary Fund,

This panel has Call for Papers open.
If you are interested in participating, please contact the panel organizer(s) to submit a proposal.

  • Catherine R Schenk, University of Oxford,,
  • Atish Ghosh, International Monetary Fund,,