Industrial Revolutions and Global Imbalances

Author Name Alexander MONGE-NARANJO (FRB St. Louis / Washington University) / UEDA Kenichi (Faculty Fellow, RIETI)
Creation Date/NO. May 2017 17-E-067
Research Project International Financial System and the World Economy: Medium and long-term issues
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Based on historical data since 1845, we identify a stylized fact, namely, alternating waves in global imbalances generated by sequential industrial revolutions. We develop a new theory to explain this stylized fact. Our theory proposes a development-stage view for the optimal global imbalances. It explains the Lucas Paradox on capital flows as well as rises and falls in the external wealth of nations over time.