 THE CURRENT ACCOUNT DEFICIT AND THE FIXED EXCHANGE RATE. ADJUSTING MECHANISMS AND MODELSAdrian Negrea () and D.B. Anca Hategan () Annals of Faculty of Economics, 2010, vol. 1, issue 1, 73-77 Abstract: The main purpose of the paper is to explain what measures can be taken in order to fix the trade deficit, and the pressure that is upon a country by imposing such measures. The international and the national supply and demand conditions change rapidly, and if a country doesn’t succeed in keeping a tight control over its deficit, a lot of factors will affect its wellbeing. In order to reduce the external trade deficit, the government needs to resort to several techniques. The desired result is to have a balanced current account, and therefore, the government is free to use measures such as fixing its exchange rate, reducing government spending etc. We have shown that all these measures will have a certain impact upon an economy, by allowing its exports to thrive and eliminate the danger from excessive imports, or vice-versa. The main conclusion our paper is that government intervention is allowed in order to maintain the balance of the current account. Keywords: current account; trade deficit; trade surplus; absorption; elasticity; the Keynesian multiplier model of national income; fixed and floating exchange rate. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2010:i:1:p:73-77 Access Statistics for this article More articles in Annals of Faculty of Economics from University of Oradea, Faculty of Economics Contact information at EDIRC. |
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