Download or read book The U S Current Account Deficit Whose Problem is It written by Hauke Barschel and published by GRIN Verlag. This book was released on 2007-12-10 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2004 in the subject Economics - International Economic Relations, grade: 1,7 (A-), Anglia Ruskin University (Ashcroft International Business School), language: English, abstract: Since the beginning of the 1980s in almost every year the United States (US or USA) current account has shown a deficit. After a brief overview about the components of a country's current account this work provides an analysis of the US deficit's effects on the US economy. Furthermore it investigates effects on economies outside the US in order to verify whose problem it is.

Download or read book Is the U S Trade Deficit Sustainable written by Catherine L. Mann and published by Peterson Institute. This book was released on 1999 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global financial crisis of 1997-98 and the widening US trade deficit have precipitated fresh inquiry into a set of perennial questions about global integration and the US economy. How has global integration affected US producers and workers, and overall growth and inflation? Is a chronic and widening deficit sustainable, or will the dollar crash, perhaps taking the economy with it? If the problem was one of "twin deficits," as many thought, why has the trade deficit continued to grow even as the budget deficit narrowed to zero? If US companies are so competitive, why does the trade deficit persist? Is the trade deficit a result of protectionism abroad? Will it lead to protectionism at home? What role do international capital markets have? Each chapter presents relevant data and a simple analytical framework as the basis for concise discussions of these major issues. The final section of the book provides an outlook for the deficit and suggests alternative policy courses for dealing with it. This book is designed for policymakers and others who are interested in the US role in the world economy. It is also suitable for courses in international economics, business, and international affairs.

Download or read book Untangling the US Deficit written by Richard A. Iley and published by Edward Elgar Publishing. This book was released on 2007-01-01 with total page 285 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book would be a good companion text for an undergraduate class in international finance or open-economy macroeconomics. Catherine L. Mann, Journal of Economic Literature Untangling the US Deficit is a unique and well-researched book and will be of great interest to academic economists and postgraduates. Policymakers, business and market economists will also find it an enlightening and challenging analysis. sirreadalot.org The book is written in a very accessible fashion, even though the authors strive to accommodate competing and complex views on the causes and cures of the US external deficit, which makes for enjoyable and informative reading. Their reliance on data, charts and bibliography result in persuasive arguments. Recommended. General readers; upper-division undergraduates through practitioners. A. Sharma, Choice What are the causes of the US current account deficit? Are the problems made in the US or the rest of the world? Are these deficits sustainable, at what level? These are the types of questions the authors set out to answer, and in essence conclude that the answers do not matter for global stability as long as imbalances are left to market forces and the US can avoid large net income outflows. The beauty of this book, however, is watching the authors (the unusual combination of a business economist and an academic economist) arrive at this conclusion. They provide insights that can come only from years of practical and theoretical experience. William E. Becker, Indiana University Bloomington, US As the US current account deficit has expanded to a record level of $811 billion in 2006, debate about the deficit s causes and consequences has also grown. Is the deficit a product of American profligacy or a glut of savings in the rest of the world? Is it a serious problem or essentially benign? Untangling the US Deficit charts a course between the competing explanations in a systematic and rigorous approach, incorporating the latest academic research and market data. Particular attention is given to the China United States trade imbalance and to the special role of the US dollar and US capital markets in global finance. This unique and well-researched book will be of great interest to academic economists and postgraduates. Policy-makers, business and market economists will also find it to be an enlightening and challenging account.

Download or read book The U S Current Account Deficit and the Global Economy written by Lawrence H. Summers and published by . This book was released on 2004 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Is the U S Current Account Deficit Sustainable written by Sebastian Edwards and published by . This book was released on 2005 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: "In this paper I analyze the relationship between the U.S. dollar and the U.S. current account. I deal with issues of sustainability, and I discuss the mechanics of current account adjustment. The analysis presented in this paper differs from other work in several respects: First, I emphasis the dynamics of the current account adjustment, going beyond computations of the "required" real depreciation of the dollar to achieve sustainability. I show that even if foreigners' (net) demand for U.S. assets continues to increase significantly, the current account deficit is likely to experience a large decline in the (not too distant) future. Second, I rely on international evidence to explore the likelihood of an abrupt decline in capital flows into the U.S. And third, I analyze the international evidence on current account reversals, to investigate the potential consequences of a (possible) sudden stop of capital flows into the U.S. This analysis suggests that the future adjustment of the U.S. external accounts is likely to result in a significant reduction in growth"--National Bureau of Economic Research web site.

Download or read book A Record Current Account Deficit written by Jack L. Hervey and published by . This book was released on 2001 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The U.S. deficit in international trade soared to new heights in 1998, again in 1999, and in all likelihood, will increase even further this year. Mirroring these deficits have been huge foreign capital inflows. In 1999, the U.S. current account deficit, that is, the difference between exports and imports of goods, services, receipts and payments of income from and to foreigners, and unilateral transfers, totaled $331 billion or 3.6 percent of nominal gross domestic product (GDP). This record deficit compares with the previous record of $217 billion (2.5 percent of GDP) in 1998 and $141 billion (1.7 percent of GDP) in 1997. The magnitude of the recent year-to-year increases in this deficit, as well as its absolute dollar size, has raised considerable concern among many public and private observers of the U.S. economy. Not since 1987, when the current account deficit peaked at a then record $161 billion, has the condition of the U.S. international accounts so captured the attention of economists, policymakers, and the popular press. Further compounding uneasiness about the current situation is the expectation by many economists that the magnitude of the trade deficit will show a further increase this year, and that only a modest reduction, if any, is likely in 2001. Indeed, trade developments thus far in 2000 indicate that at least the first half of that expectation (that is, an increase in the year-to-year size of the deficit during 2000) will be borne out. There are also fears surrounding an eventual economic adjustment, "the current account gap is the single biggest threat to the current expansion of the economy."1 There is nothing inherently "bad" (or "good") about a current account deficit, or for that matter, a current account surplus. However, the concern about the deficit that has drawn the attention of reasonable observers centers on a specific issue: Does the size of the deficit (or the recent rapid increase) in the U.S. international accounts represent a risk to our economic well-being in the near term or in the longer term? To answer this question, we need to identify the underlying cause of the deficit. What developments during the past two or three years, in the domestic economy and in the rest of the world, have led the U.S. to purchase dramatically more goods and services from abroad than it sold abroad? Furthermore, can the U.S. economy maintain a deficit of this magnitude? And, if not, what are the likely implications of an adjustment for the U.S. economy? Three rationales are commonly used to explain the sudden and dramatic increase in the U.S. current account deficit. The first rationale contends that U.S. consumers have shifted their preferences from saving for the future, witness the near zero personal savings rate, toward purchasing more consumption goods in the present.2 This surge in demand for domestic consumption goods translates into a corresponding increase in imported consumption goods. We call this the consumption boom hypothesis. Certainly, trade in consumer type goods has increased in recent years. Indeed, more than 60 percent ($52 billion) of the year-to-year increase in the goods trade deficit between 1998 and 1999 was accounted for by the year-to-year increase in consumer goods, foods and beverages, and automotive imports (most of which are broadly classed as consumer goods). If the consumption boom story is true, it implies that there has been excessive borrowing from abroad to finance a domestic consumption binge. And according to this argument, since this borrowing has not gone toward enhancing productivity, the economy will be forced to suffer a decline in consumption in the future as resources are diverted away from production for domestic use toward production to service the foreign debt. A second hypothesis suggests that the financial/exchange rate crises in Asia, Russia, and Brazil from mid-1997 through early 1999 contributed to a "safe haven" inflow of short-term foreign capital into U.S. markets.3 Briefly, the idea here is that the flight of capital from the foreign economies takes away from the productive and consuming capacity of those economies; it not only detracts from the capacity of their domestic economies to perform, but it also reduces their capacity to import from foreign markets, namely, the U.S. From the U.S. perspective, this flight of foreign capital into the economy does two things, it makes it more difficult for the U.S. to export goods and services to these now poorer performing foreign markets and it facilitates (makes cheaper, in terms of dollars) the U.S. importation of goods and services from these countries. Thus, other things remaining the same, the U.S. deficit increases. We call this the safe haven hypothesis. The concern implicit within this explanation for the capital inflow is that economic recovery and increased stability abroad might result in an abrupt and substantial outflow of short-term capital, with resulting disruption in U.S. financial markets. A third potential explanation for the recent rapid increase in the current account deficit is associated with the technological restructuring of the U.S. economy. This hypothesis implies that a technology shift in the economy (largely related to the assimilation of advances in computer and communication technology) has increased the level of productivity, and returns on investment, in the economy. Demand for investment has increased in response to this technology shift, which in turn has stimulated the inflow (supply) of foreign capital in support of this new type of investment. We call this the technological change hypothesis. There is less concern about an eventual adverse adjustment in the economy in this case, because this hypothesis implies that productivity-enhancing investment will result in increased output in the economy, thereby facilitating the servicing and eventual repayment of the increased level of borrowing from abroad (the larger trade/current account deficit).4 Before we can examine the relationship between the international accounts and the domestic economy, we need to understand how these international transactions work. In the next section, we set out a simple framework for understanding these relationships, based on national income accounting identities. We then review the three hypotheses outlined above, which seek to explain the recent rapid increase in the current account deficit/capital inflow, and analyze how well they match the available evidence. Finally, we consider whether the deficit is sustainable and, if not, what the implications of each hypothesis might be for an eventual adjustment in the U.S. economy. We find little support for the consumption boom explanation in the data. While consumption has increased, its share of total expenditures has declined. We find some evidence to support the safe haven rationale for the increase in capital inflows. However, because much of the capital inflow appears to represent long-term investment rather than a short-term flight to safety, we do not find the implications of this story to be particularly worrisome for the health of the U.S. economy. In other words, our view is that an unwinding of such capital inflows is unlikely to be overly disruptive to domestic financial markets. Finally, we find the technological change argument to have some merit. Much of the recent increase in goods imports has been in the "investment" goods categories-capital equipment, intermediate capital equipment components, and industrial supplies used in the production of capital goods. Recent gains in productivity measures and continuing structural changes across the spectrum of U.S. industry suggest that the economy may be shifting to a new and higher level of potential output. An economy in the process of such a shift has an incentive to increase borrowing from abroad to fulfill the increased demand for investment. We believe that the available data on the current U.S. economic environment fit well with this scenario.

Download or read book G7 Current Account Imbalances written by Richard H. Clarida and published by University of Chicago Press. This book was released on 2007-11-01 with total page 519 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current account deficit of the United States is more than six percent of its gross domestic product—an all-time high. And the rest of the world, including other G7 countries such as Japan and Germany, must collectively run current account surpluses to finance this deficit. How long can such unevenness between imports and exports be sustained, and what form might their eventual reconciliation take? Putting forth scenarios ranging from a gradual correction to a crash landing for the dollar, G7 Current Account Imbalances brings together economists from around the globe to consider the origins, status, and future of those disparities. An esteemed group of collaborators here examines the role of the bursting of the dot-com bubble, the history of previous episodes of current account adjustments, and the possibility of the Euro surpassing the dollar as the leading international reserve currency. Though there are areas of broad agreement—that the imbalances will ultimately decline and that currency revaluations will be part of the solution—many areas of contention remain regarding both the dangers of imbalances and the possible forms of adjustment. This volume will be of tremendous value to economists, politicians, and business leaders alike as they look to the future of the G7 economies.

Download or read book Balance of Payments Imbalances by Alan Greenspan written by International Monetary Fund and published by International Monetary Fund. This book was released on 2007-12-12 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the developing countries, which accounted for nearly half the value of those surpluses, were apparently unable to find sufficiently profitable investments at home that overcame market and political risk. The United States a decade ago likely could not have run up today’s near $800 billion annual deficit for the simple reason that we could not have attracted the foreign savings to finance it. In 1995, for example, total cross-border saving was less than $300 billion. The long-term updrift in this broader swath of unconsolidated deficits and mostly offsetting surpluses of economic entities has been persistent but gradual for decades, probably generations. However, the component of that broad set that captures only the net foreign financing of the imbalances of the individual US economic entities, our current account deficit, increased from negligible in the early 1990s to 6.2 percent of our GDP by 2006.

Download or read book The United States as a Debtor Nation written by William R Cline and published by Columbia University Press. This book was released on 2005-09-30 with total page 325 pages. Available in PDF, EPUB and Kindle. Book excerpt: The United States has once again entered into a period of large external imbalances. This time the current account deficit, at nearly 6 percent of GDP in 2004, is much larger than in the last episode, when the deficit peaked at about 3.5 percent of GDP in 1987. Moreover, the deficit is on track to become substantially larger over the next several years. This study examines whether the large and growing current account deficit is a problem, and if so, how the problem can be solved. A central policy conclusion of this study is that it is increasingly important that the United States reduce its external current account deficit. This deficit is no longer benign as it arguably was in the late 1990s when it was financing high investment instead of high consumption and large government dissaving.

Download or read book The Dot com Bubble the Bush Deficits and the U S Current Account written by Aart Kraay and published by World Bank Publications. This book was released on 2005 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors challenge this view here and develop two alternative interpretations. Both are based on the notion that a bubble (the "dot-com" bubble) has been driving the stock market, but differ in their assumptions about the interactions between this bubble and fiscal policy (the "Bush" deficits). The "benevolent" view holds that a change in investor sentiment led to the collapse of the dot-com bubble and the Bush deficits were a welfare-improving policy response to this event. The "cynical" view holds instead that the Bush deficits led to the collapse of the dot-com bubble as the new administration tried to appropriate rents from foreign investors. The authors discuss the implications of each of these views for the future evolution of the U.S. economy and, in particular, its net foreign asset position."

Download or read book Sharp Reductions in Current Account Deficits written by Mr.Gian Milesi-Ferretti and published by International Monetary Fund. This book was released on 1997-12-01 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper studies determinants and consequences of sharp reductions in current account imbalances (reversals) in low- and middle-income countries. It poses two questions: what triggers reversals, and what factors explain how costly reversals are? It finds that both domestic variables, such as the current account balance, openness to trade, and the level of reserves, and external variables, such as terms of trade shocks, U.S. real interest rates, and growth in industrial countries, seem to play important roles in explaining reversals in current account imbalances. It also finds some evidence that countries with a less appreciated real exchange rate, higher investment, and more openness before the reversal tend to grow faster after a reversal occurs.

Download or read book Macroeconomics for Professionals written by Leslie Lipschitz and published by Cambridge University Press. This book was released on 2019-01-23 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding macroeconomic developments and policies in the twenty-first century is daunting: policy-makers face the combined challenges of supporting economic activity and employment, keeping inflation low and risks of financial crises at bay, and navigating the ever-tighter linkages of globalization. Many professionals face demands to evaluate the implications of developments and policies for their business, financial, or public policy decisions. Macroeconomics for Professionals provides a concise, rigorous, yet intuitive framework for assessing a country's macroeconomic outlook and policies. Drawing on years of experience at the International Monetary Fund, Leslie Lipschitz and Susan Schadler have created an operating manual for professional applied economists and all those required to evaluate economic analysis.

Download or read book The External Balance Assessment EBA Methodology written by Mr.Steven Phillips and published by International Monetary Fund. This book was released on 2014-01-13 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: The External Balance Assessment (EBA) methodology has been developed by the IMF’s Research Department as a successor to the CGER methodology for assessing current accounts and exchange rates in a multilaterally consistent manner. Compared to other approaches, EBA emphasizes distinguishing between the positive empirical analysis and the normative assessment of current accounts and exchange rates, and highlights the roles of policies and policy distortions. This paper provides a comprehensive description and discussion of the 2013 version (“2.0”) of the EBA methodology, including areas for its further development.

Download or read book Trade Wars are Class Wars written by Matthew C. Klein and published by Yale University Press. This book was released on 2020-01-01 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This is a very important book."--Martin Wolf, Financial TimesA provocative look at how today's trade conflicts are caused by governments promoting the interests of elites at the expense of workers Longlisted for the 2020 Financial Times & McKinsey Business Book of the Year Award "Worth reading for [the authors'] insights into the history of trade and finance."--George Melloan, Wall Street Journal Trade disputes are usually understood as conflicts between countries with competing national interests, but as Matthew C. Klein and Michael Pettis show, they are often the unexpected result of domestic political choices to serve the interests of the rich at the expense of workers and ordinary retirees. Klein and Pettis trace the origins of today's trade wars to decisions made by politicians and business leaders in China, Europe, and the United States over the past thirty years. Across the world, the rich have prospered while workers can no longer afford to buy what they produce, have lost their jobs, or have been forced into higher levels of debt. In this thought-provoking challenge to mainstream views, the authors provide a cohesive narrative that shows how the class wars of rising inequality are a threat to the global economy and international peace--and what we can do about it.

Download or read book Current Account Reversals and Currency Crises written by Mr.Gian Milesi-Ferretti and published by International Monetary Fund. This book was released on 1998-06-01 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies large reductions in current account deficits and exchange rate depreciations in low- and middle-income countries. It examines which factors help predict the occurrence of a reversal or a currency crisis, and how these events affect macroeconomic performance. Both domestic factors, such as the low reserves, and external factors, such as unfavorable terms of trade, are found to trigger reversals and currency crises. The two types of events are, however, distinct; an exchange rate crash is associated with a fall in output growth and a recovery thereafter, while for reversals there is no systematic evidence of a growth slowdown.

Download or read book Current account Sustainability written by Gian Maria Milesi-Ferretti and published by International Finance Section Princeton University Internati. This book was released on 1996 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study presents a notion of current-account sustainability that explicitly considers, in addition to intertemporal solvency, a willingness to pay and to lend. It argues that this notion of sustainability provides a useful framework for understanding the variety of country experiences with protracted current-account imbalances. Based on this notion, the authors identify a number of potential sustainability indicators related to the structure of the economy and the economic policy stance. They use these indicators in the evaluation of the experience of a number of countries that have run persistent current-account imbalances and ask whether they help to discriminate between countries that underwent an external crisis and those that did not.

Download or read book US China Cooperation in a Changing Global Economy written by Adam S. Posen and published by Peterson Institute for International Economics. This book was released on 2017-06-01 with total page 366 pages. Available in PDF, EPUB and Kindle. Book excerpt: 978-0-88132-729-8, PIIE, IIE, Peterson Institute for International Economics, US-China Cooperation in a Changing Global Economy, CF40, Adam S. Posen, China-US Economic Cooperation, Policy Changes, US Fiscal Policy, US Economy, Trump Administration, Exchange Rates, Finance, International Monetary System, G-20 Cooperation, Trade and Investment, US-China Trade Disputes, wto, bilateral Investment Treaty, fdi, Trade Wars