External Debt and Foreign Investment

J.D. Pitchford
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J.D. Pitchford: Dept. of Economics, Australian National University, Canberra

Economic Analysis and Policy, 1990, vol. 20, issue 1, 17-32

Abstract: Trade in saving and investment, like trade in commodities, can confer considerable benefits on both borrowing and lending countries. As current account balances are the measure of this international capital transfer, it is not clear why the Australian current account deficit is viewed with such concern. It is suggested that the pegged exchange rate concept of external imbalance has been incorrectly associated with current account imbalance. The paper then explores reasons why current account deficits may be a symptom of problems elsewhere in the economy, concluding that in all cases the problem, not the symptom, should be the focus of policy action.

Date: 1990
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