Chapter 4: US adjustment needs

Giancarlo Corsetti, Michael Devereux, Luigi Guiso, John Hassler, Gilles Saint-Paul, Hans-Werner Sinn, Jan-Egbert Sturm and Xavier Vives

EEAG Report on the European Economy, 2010, 101-110

Abstract: The US economy is arguably following an unsustainable trajectory. The main indicators of this are a large current account deficit, a large federal budget deficit and trend-wise increasing costs of Social Security and Medicare. In this chapter, we will discuss these observations and to what extent the financial and economic crisis may have changed the outlook. Before this, we need to define what we mean by sustainability. An often used definition of sustainability is that the inter-temporal budget restriction is satisfied.

Date: 2010
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