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The changing nature of the U.S. balance of payments


  • Rebecca Hellerstein
  • Cédric Tille


Earnings on cross-border investments figure only marginally in net estimates of the U.S. current account, but they represent an increasingly large share of gross flows between the United States and other nations. Because these earnings fluctuate much more sharply than trade flows, they can be expected to create permanently higher current account volatility. Such increased volatility is not necessarily grounds for concern, however; it reflects an international sharing of risk that provides a buffer against domestic economic uncertainty.

Suggested Citation

  • Rebecca Hellerstein & Cédric Tille, 2008. "The changing nature of the U.S. balance of payments," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 14(Jun).
  • Handle: RePEc:fip:fednci:y:2008:i:jun:n:v.14no.4

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    References listed on IDEAS

    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. 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).
    3. Feldstein, Martin S., 1973. "Tax incentives, corporate saving, and capital accumulation in the United States," Journal of Public Economics, Elsevier, vol. 2(2), pages 159-171, April.
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