TY - BOOK ID - 84543278 TI - Globalization, Gluts, Innovation or Irrationality : What Explains the Easy Financing of the U.S. Current Account Deficit? AU - Balakrishnan, Ravi. AU - Tulin, Volodymyr. AU - Bayoumi, Tamim. PY - 2007 SN - 1462387101 145274002X 1283517027 9786613829474 1451911777 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Exports and Imports KW - Finance: General KW - Investments: Bonds KW - General Financial Markets: General (includes Measurement and Data) KW - International Investment KW - Long-term Capital Movements KW - Finance KW - Investment & securities KW - International economics KW - Securities markets KW - Bonds KW - Emerging and frontier financial markets KW - Sovereign bonds KW - Foreign assets KW - Capital market KW - Financial services industry KW - Investments, Foreign KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84543278 AB - This paper examines the roles of U.S. financial innovation, financial globalization, and the savings glut hypothesis in explaining the rise in U.S. external debt, first in a portfolio balance model, and then empirically. Perhaps surprisingly, financial deepening and falling home bias in industrialized countries explain a large share of external financing. The savings glut hypothesis (including difficult-to-track petrodollar recycling) and U.S. financial innovation are also important, in part as a cause of declining home bias in industrialized countries. The latter underscores the importance of not looking at these factors in isolation, but rather as a constellation of forces that can be self-reinforcing. ER -