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The U.S. trade deficit and the "new economy"


  • Michael R. Pakko


Amidst the overall strength and longevity of the U.S. economic expansion of the 1990s, a growing current account deficit is one indicator that often is viewed with concern. In this article, Michael Pakko discusses some basic economic principles about current accounts and how they relate to the U.S. experience during the 1990s. He suggests that recent deficits should not be thought of as a source of weakness in an otherwise vigorous economy, but rather, that they are reflective of the same forces underlying recent economic strength.

Suggested Citation

  • Michael R. Pakko, 1999. "The U.S. trade deficit and the "new economy"," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 11-20.
  • Handle: RePEc:fip:fedlrv:y:1999:i:sep:p:11-20:n:v.81no.5

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    References listed on IDEAS

    1. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
    2. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-362, June.
    3. Donald S. Allen, 1997. "Where's the productivity growth (from the information technology revolution)?," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 15-25.
    4. Jorgenson, Dale W., 1966. "The Embodiment Hypothesis," Scholarly Articles 3403063, Harvard University Department of Economics.
    5. Dale W. Jorgenson, 1966. "The Embodiment Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 74, pages 1-1.
    6. Gary Burtless, 1995. "International Trade and the Rise in Earnings Inequality," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 800-816, June.
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    Cited by:

    1. Menzie D. Chinn & Barry Eichengreen & Hiro Ito, 2014. "A forensic analysis of global imbalances," Oxford Economic Papers, Oxford University Press, vol. 66(2), pages 465-490.
    2. Ketenci, Natalya & Uz, Idil, 2010. "Determinants of current account in the EU: the relation between internal and external balances in the new members," MPRA Paper 27466, University Library of Munich, Germany.
    3. John Kitchen & Menzie Chinn, 2011. "Financing US Debt: Is There Enough Money in the World – and at What Cost?," International Finance, Wiley Blackwell, vol. 14(3), pages 373-413, December.


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