However, we should bear in mind that lower participation rates are not necessarily solely associated with personal preferences, but are also triggered by legal and regulatory environment, tax systems and social institutions.
The accumulation of global external imbalances in today’s world should not be seen as a necessary precondition for the provision of global liquidity and the expansion of world trade. Let me explain. Today, the United States and the euro area are not obliged to run rising current account deficits to meet the demand for dollars or euros.4 This is for two main, interlinked reasons.