Thesis: Global Imbalances

Sample Thesis Paper

There were a number of factors that led to an increased demand for US assets in the global market. The fact of the matter is that signs of this global recession were observable as early as 1991 (Caballero, Farhi and Gourinchas, An Equilibrium Model of “Global Imbalances” and Low Interest Rates). In 1991, the US deficit began to worsen and continued to worsen precariously. Economical imbalances were slowly beginning to gather momentum around the world and the build-up of deficits was developing at a slow yet steady rate.

The end of millennium observed crashes amongst information technology firms which experienced higher growth rates and formed what is often referred to as bubble economy. This raised eyebrows of investors which heavily invested in technology stocks. In 2001, the financial sector was hit by may be one of the highest profiled scandal of Enron that spooked the capital markets and spiked through the accounting profession. Aftermath of this scandal was uncovering of a series of accounting scandals both in corporate and financial sectors. The global economy was shaken as these scandals were commonly unearthed in the biggest economy of the world and its capital markets were considered to be the safest bet for investors. The recent financial crisis once again challenged the regulators who have been relying on the projected assurances and completeness in new regulations. The economic depression has swept across major economies which seek collective efforts to manage it and support their financial and corporate sectors to revive investors confidence and consumer spending.

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