01924cas a2200241 a 4500 AALejournalIMF004894 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451866759 1018-5941 BD-DhAAL BD-DhAAL Xafa, Miranda. Global Imbalances and Financial Stability / Miranda Xafa. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (20 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper discusses two opposing views on global imbalances: The "traditional view", which regards the imbalances as a threat to global economic and financial stability, and the "new paradigm" view, which considers that they are the natural consequence of economic and financial globalization. In terms of their policy implications, the traditional view focuses on monetary and fiscal policy decisions in the United States that need to be urgently reversed to avoid an abrupt unwinding of the imbalances involving a sell-off of dollar assets, a sharp increase in U.S. interest rates, and a hard landing for the global economy. By contrast, the new paradigm view considers that the imbalances will be resolved smoothly through the normal functioning of markets. The paper argues that an abrupt unwinding of imbalances is highly unlikely and advances a number of arguments in support of the new paradigm view. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2007/111 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/111/001.2007.issue-111-en.xml IMF e-Library