Viewing the current account deficit as a capital inflow

Matthew Higgins and Thomas Klitgaard

Current Issues in Economics and Finance, 1998, vol. 4, issue Dec

Abstract: With the 1998 current account deficit approaching $225 billion, attention is again focusing on the deficit's impact on U.S. jobs. Although a high deficit does adversely affect employment in export- and import-competing industries, it also means that considerable foreign capital is flowing into the United States, supporting domestic investment spending that stimulates growth and creates jobs.

Keywords: Balance of trade; Investments; Capital movements; Employment (Economic theory); Capital investments (search for similar items in EconPapers)
Date: 1998
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