The End of Large Current Account Deficits, 1970-2002: Are There Lessons for the United States?

Sebastian Edwards ()

No 11669, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The future of the U.S. current account -- and thus of the U.S. dollar -- depend on whether foreign investors will continue to add U.S. assets to their investment portfolios. However, even under optimistic scenarios, the U.S. current account deficit is likely to go through a significant reversal at some point in time. This adjustment may be as large of 4% to 5% of GDP. In order to have an idea of the possible consequences of this type of adjustment, I have analyzed the international evidence on current account reversals using both non-parametric techniques as well as panel regressions. The results from this empirical investigation indicate that major current account reversals have tended to result in large declines in GDP growth. I also analyze the large U.S. current account adjustment of 1987-1991.

JEL-codes: F02 F43 O11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk
Date: 2005-10
Note: EFG IFM ME
View list of references View citations in EconPapers

Downloads: (external link)
http://www.nber.org/papers/w11669.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

Related works:
Journal Article: The end of large current account deficits: 1970-2002: are there lessons for the United States? (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:nbr:nberwo:11669

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11669
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc
Address: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Contact information at EDIRC.
Series data maintained by ().