Sustainability

Brendan Brown

Chapter 5 in What Drives Global Capital Flows?, 2006, pp 120-145 from Palgrave Macmillan

Abstract: Abstract Perhaps the biggest topic in international economic policy discussions over recent years (2003–6) has been the so-called sustainability (or non-sustainability) of mega US current account deficits. The issue of sustainability had also loomed large back in the mid-1980s, a previous occasion of huge US current account deficits. It had largely faded from view in the late 1980s and early 1990s when the deficit had fallen substantially (under the influence of a long period of US economic slack and of a boom in Europe led by German unification). Even when the deficit bulged in the late 1990s it was largely ignored, being regarded as a natural counterpart of the capital spending boom associated with the then US miracle economy. The subject came back into focus as the US economy recovered from the 2001 recession and the deficit, powered by a large household sector savings deficit (see Chapter 3, p. 72) and a huge Federal budget deficit, reached new record levels (see Figure 5.1).

Keywords: Interest Rate; Current Account; Euro Area; Real Interest Rate; Income Elasticity (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62729-1_5

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DOI: 10.1057/9780230627291_5

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