UK fiscal policy and external balance under Bretton Woods: Twin deficits or distant relatives?

Joshua J. Banerjee
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Abstract

The United Kingdom (UK) is typically regarded as the sine qua non case of an economy experiencing chronic external imbalances under the post‐war Bretton Woods system, apparently unable to reconcile the divergent objectives of robust economic growth and current account equilibrium. This paper investigates the famed ‘twin deficits hypothesis’, which ascribed responsibility for the UK's current account woes to an excessively lax fiscal policy. Calling on two distinct approaches to identifying fiscal shocks, we find evidence decisively against the traditional twin deficits view, and uncover serious shortcomings in the way that both policymakers and academics conceptualized the transmission of fiscal policy to the current account. Our results demonstrate that factors other than fiscal policy are of considerably greater importance for understanding the UK's historical experience, and we elaborate on the need for a reappraisal of some classic policy debates concerning external adjustment under the Bretton Woods system.
布雷顿森林体系下的英国财政政策和对外收支平衡:双赤字还是远亲?
在战后布雷顿森林体系下,英国被视为经济长期对外失衡的典型案例,它显然无法兼顾经济强劲增长与经常账户平衡这两个不同的目标。本文对著名的 "双赤字假说 "进行了研究,该假说将英国经常账户困境的责任归咎于过于宽松的财政政策。利用两种不同的方法来识别财政冲击,我们发现了与传统的双赤字观点截然相反的证据,并揭示了决策者和学者在将财政政策传导至经常账户的概念化方式上存在的严重缺陷。我们的研究结果表明,要理解英国的历史经验,财政政策以外的其他因素的重要性要大得多,我们还阐述了重新评估布雷顿森林体系下有关外部调整的一些经典政策辩论的必要性。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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