Is the large U.S. current account deficit sustainable?
The U.S. current account deficit has grown steadily since 1991, hitting record levels of 3.6 percent of GDP in 1999 and 4.4 percent in 2000. In recent years, the growing deficits have increasingly raised concerns. For instance, most economists who took part in a recent Wall Street Journal forecasting survey agreed that the current account deficit is the major threat facing the U.S. economy. Some policymakers have also suggested that the large and growing U.S. current account deficit may be unsustainable and thus may create problems for the economy.> Holman examines the causes and consequences of the large current account deficits in the United States. She identifies the potential sources of the large deficits. Much of the rise in the current account deficit over the past decade can be attributed to two factors: accelerating U.S. productivity and a surge in household wealth driven by the stock market. She then examines whether the U.S. current account deficit is sustainable in the near term. In this analysis, an unsustainable deficit is defined as one that triggers a sharp hike in interest rates, a rapid depreciation of the dollar, or some other domestic or global economic disruption. She concludes that, over the near term, deficits of roughly the current magnitude are sustainable and therefore unlikely to disrupt the U.S. economy.
Volume (Year): (2001)
Issue (Month): Q I ()
|Contact details of provider:|| Postal: |
Phone: (816) 881-2254
Web page: http://www.kansascityfed.org
More information through EDIRC
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2001:i:qi:p:5-23:n:v.86no.1. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LDayrit)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.