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Correcting US Imbalances

Published online by Cambridge University Press:  26 March 2020

Ali Al-Eyd ,
Ray Barrell  and
Olga Pomerantz
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Extract

In the January Review discussion of the US current account imbalances, we explored the links between the US current account deficit and exchange rates, and focused on the economic adjustments required to correct the US ‘triple’ deficits. Using NiGEM, we illustrated that a sustained adjustment in the US current account deficit cannot be achieved through a temporary nominal depreciation alone – whether risk or policy driven – but also requires a redressing of the government and household imbalances and a consequent increase in national savings.

Type
Articles
Information
National Institute Economic Review , Volume 192 , April 2005 , pp. 33 - 39
Copyright
Copyright © 2005 National Institute of Economic and Social Research

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