Can External Shocks Explain theAsian Side of Global Imbalances? Lessons from a StructuralVARModel with Block Exogeneity

During the 2000s, we observed the accumulation of global imbalances resulting primarily from massive current account imbalances in the USA and in Asia. This paper studies the impact of external shocks on East A sian countries in order to determine if these can account for the A sian side of global imbalances. To this end, we estimate a structural vector autoregression ( VAR ) model with block exogeneity using Bayesian inference. The three external shocks are an oil shock, a US monetary shock and a US financial shock. Our main findings are as follows: (i) external shocks account for the current account surplus in K orea, M alaysia, the P hilippines, S ingapore, and T hailand and, to a lesser extent, in J apan and I ndonesia; (ii) the oil shock and the US monetary shock seem to have influenced current account balances through real and monetary channels, and the US financial shock through the financial channel.