Perspectives on the U.S. Current Account Deficit and Sustainability
- (pp. 131-152)
(Complimentary)
Abstract
This essay considers the underpinnings of the large U.S. current account deficit. It then tackles the question of whether the U.S. current account deficit is sustainable. A current account deficit is "sustainable" at a point in time if neither it, nor the associated foreign capital inflows, nor the negative net international investment position are large enough to induce significant changes in economic variables, such as consumption or investment or interest rates or exchange rates. Even if the current account deficit is sustainable by this definition today, its trajectory could still be creating future risks for the U.S. and global economy.Citation
Mann, Catherine, L. 2002. "Perspectives on the U.S. Current Account Deficit and Sustainability." Journal of Economic Perspectives, 16 (3): 131-152. DOI: 10.1257/089533002760278758JEL Classification
- F32 Current Account Adjustment; Short-term Capital Movements
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