This paper addresses the issue of a coordinated adjustment plan (“new Plaza") to close global imbalances. We show that the complexity of the network of bilateral trade imbalances has increased, revealing that any plan focusing on industrialised countries only is likely to be ineffective. By...

Global imbalances are not new as much as the effort to address them. In the mid 1980s the phenomenon led the most industrialised countries to orchestrate a devaluation of the US dollar so as to reduce the US trade deficit. Some economists have called for a similar "New Plaza" agreement to tackle...

This paper analyzes the reaction of exporters to exchange rate changes. We present a model where, in the presence of distribution costs in the export market, high and low productivity firms react differently to a depreciation. Whereas high productivity firms optimally raise their markup rather...