The End of Large Current Account Deficits, 1970-2002: Are There Lessons for the United States? / Sebastian Edwards.

Format:

Book

Author/Creator:

Edwards, Sebastian.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11669.

NBER working paper series no. w11669

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The End of Large Current Account Deficits, 1970-2002

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

The future of the U.S. current account -- and thus of the U.S. dollar -- depend on whether foreign investors will continue to add U.S. assets to their investment portfolios. However, even under optimistic scenarios, the U.S. current account deficit is likely to go through a significant reversal at some point in time. This adjustment may be as large of 4% to 5% of GDP. In order to have an idea of the possible consequences of this type of adjustment, I have analyzed the international evidence on current account reversals using both non-parametric techniques as well as panel regressions. The results from this empirical investigation indicate that major current account reversals have tended to result in large declines in GDP growth. I also analyze the large U.S. current account adjustment of 1987-1991.

Notes:

Print version record

October 2005.