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Viewing the current account deficit as a capital inflow

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  • Matthew Higgins
  • Thomas Klitgaard

Abstract

With the 1998 current account deficit approaching $225 billion, attention is again focusing on the deficit's impact on U.S. jobs. Although a high deficit does adversely affect employment in export- and import-competing industries, it also means that considerable foreign capital is flowing into the United States, supporting domestic investment spending that stimulates growth and creates jobs.

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Bibliographic Info

Article provided by Federal Reserve Bank of New York in its journal Current Issues in Economics and Finance.

Volume (Year): 4 (1998)
Issue (Month): Dec ()
Pages:

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Handle: RePEc:fip:fednci:y:1998:i:dec:n:v.4no.13

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Keywords: Balance of trade ; Capital movements ; Capital investments ; Investments ; Employment (Economic theory);

References

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  1. Jonathan McCarthy & Han N. Pham, 1995. "The impact of individual retirement accounts on savings," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 1(Sep).
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Cited by:
  1. Stefan Papaioannou & Kei-Mu Yi, 2001. "The effects of a booming economy on the U.S. trade deficit," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 7(Feb).
  2. Mohammed I. Ansari, 2004. "Sustainability of the US current account deficit: An econometric analysis of the impact of capital inflow on domestic economy," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 249-269, November.
  3. Matthew Higgins & Thomas Klitgaard, 2000. "Asia's trade performance after the currency crisis," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 37-49.
  4. Cosimo Magazzino, 2012. "Fiscal Policy, Consumption and Current Account in the European Countries," Economics Bulletin, AccessEcon, vol. 32(2), pages 1330-1344.
  5. Matthew Higgins & Thomas Klitgaard & Cedric Tille, 2005. "The income implications of rising U.S. international liabilities," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 11(Dec).
  6. Matthew Higgins & Thomas Klitgaard, 2004. "Reserve accumulation: implications for global capital flows and financial markets," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 10(Sep).
  7. Richard Peach & Charles Steindel, 2000. "A nation of spendthrifts? An analysis of trends in personal and gross saving," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Sep).

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