IDEAS home Printed from https://ideas.repec.org/a/pal/imfstp/v56y2009i3p596-632.html
   My bibliography  Save this article

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

Author

Listed:
  • Carol C Bertaut
  • Steven B Kamin
  • Charles P Thomas

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

Suggested Citation

  • Carol C Bertaut & Steven B Kamin & Charles P Thomas, 2009. "How Long Can the Unsustainable U.S. Current Account Deficit Be Sustained?," IMF Staff Papers, Palgrave Macmillan, vol. 56(3), pages 596-632, August.
    • Handle: RePEc:pal:imfstp:v:56:y:2009:i:3:p:596-632
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/imfsp/journal/v56/n3/pdf/imfsp20097a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: http://www.palgrave-journals.com/imfsp/journal/v56/n3/full/imfsp20097a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Menzie D. Chinn, 2012. "China, East Asia and global rebalancing," Chapters, in: Ewald Nowotny & Peter Mooslechner & Doris Ritzberger-Grünwald (ed.), European Integration in a Global Economy, chapter 4, pages 24-35, Edward Elgar Publishing.
    2. Lian An & Xiaomei Ren & Huimin Li & Jing Xu, 2017. "Exchange Rate And Us Macroeconomy: Evidence From The Factor-Augmented Vector Autoregressive Model," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 483-508, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:imfstp:v:56:y:2009:i:3:p:596-632. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.