EconPapers    
Economics at your fingertips  
 

How Long Can the Unsustainable U.S. Current Account Deficit Be Sustained&quest

Carol C Bertaut, Steven B Kamin and Charles Thomas

IMF Staff Papers, 2009, vol. 56, issue 3, 596-632

Abstract: This paper addresses three questions about prospects for the U.S. current account deficit. First, is it sustainable in the long term? Projections of a detailed model of the U.S. balance of payments suggest that the current account deficit will resume widening and external indebtedness will continue to expand. Second, how long will it take for indebtedness to rise sufficiently to prompt some pullback by global investors? We project that external debt, net investment income, and the share of U.S. claims in foreigners’ portfolios will take many years to reach levels that would test global investors’ willingness to extend financing. Finally, if and when levels of sustainable debt burden are breached, how readily would asset prices respond and the current account start to narrow? We find little evidence that, as countries’ indebtedness rises, the changes in asset prices and exchange rates needed to correct the current account materialize all that rapidly. IMF Staff Papers (2009) 56, 596–632. doi:10.1057/imfsp.2009.7; published online 26 May 2009

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.palgrave-journals.com/imfsp/journal/v56/n3/pdf/imfsp20097a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/imfsp/journal/v56/n3/full/imfsp20097a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
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: https://EconPapers.repec.org/RePEc:pal:imfstp:v:56:y:2009:i:3:p:596-632

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-19
Handle: RePEc:pal:imfstp:v:56:y:2009:i:3:p:596-632