Coping with the Inevitable Adjustment in the US Current Account

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Coping with the Inevitable Adjustment in the US Current Account

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Peter Jarrett

Abstract

In recent years the US current account deficit has grown to the point that most observers consider its level to be already unsustainable. Yet it seems set to continue to increase in the foreseeable future, with net foreign debt likely to surge. This paper describes the present deficit from three points of view: imbalances of imports over exports of goods, services and income; of inflows over outflows of capital; and of investment and spending over savings and income in the domestic economy. It then examines the possible causal factors for these disequilibria and goes on to describe the arguments for both optimistic and pessimistic views as to their unwinding over time. Last, it suggests a number of policy conclusions as to how the US authorities should factor the presence of the deficit into their decision-making, even though they rightly do not view it as a target outcome. The bottom line is that the importance of avoiding disincentives to save and of maintaining as much flexibility as possible in the economy is reinforced by the risks posed by the deficit. This Working Paper relates to the 2005 OECD Economic Survey of the United States (www.oecd.org/eco/surveys/us).

Faire face à l’inévitable ajustement de la balance courante aux États-Unis
Ces dernières années, le déficit de la balance courante des États-Unis s’est creusé à un point tel que la plupart des observateurs jugent son niveau déjà insoutenable. Pourtant, il semble devoir continuer de croître dans l’avenir prévisible, tandis que la dette extérieure nette devrait augmenter fortement. Ce papier décrit le déficit actuel sous trois angles : le déséquilibre entre les importations et les exportations de marchandises, de services et de revenus ; le déséquilibre entre les entrées et les sorties de capitaux ; enfin, dans l’économie intérieure, le déséquilibre entre l’investissement et la dépense, d’une part, et l’épargne et le revenu, d’autre part. Il examine ensuite les causes possibles de ces déséquilibres puis expose les arguments sur lesquels se fondent les évaluations optimistes ou pessimistes concernant leur résorption à terme. Enfin, ce chapitre présente un certain nombre de conclusions sur la façon dont les autorités des États-Unis devraient intégrer le déficit dans leur processus de prise de décision, même si, à juste titre, elles n’en font pas un objectif de résultat. En fin de compte, les risques posés par le déficit soulignent la nécessité d’éviter les désincitations à épargner et de maintenir un maximum de flexibilité dans l’économie Ce document de travail se rapporte à l'Étude économique de l'OCDE des États-Unis 2005 (www.oecd.org/eco/etudes/us).

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Paper provided by OECD, Economics Department in its series OECD Economics Department Working Papers with number 467.

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Date of creation: 13 Dec 2005
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Handle: RePEc:oec:ecoaaa:467-en

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Find related papers by JEL classification:
F1 - International Economics - - Trade
F3 - International Economics - - International Finance
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-01-01 (All new papers)

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