IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/91864.html
   My bibliography  Save this paper

Is the United States Relying on Foreign Investors to Finance Its Bigger Budget Deficit?

Author

Abstract

The fiscal packages passed in 2020 and 2021 to help the economy cope with the pandemic caused a dramatic increase in federal government borrowing. One might have expected that foreign investors were important buyers of this new debt, but that was not the case. They were instead net sellers of Treasury securities. Still, the amount of money flowing into the United States increased last year, which helped fund the government’s borrowing, if only indirectly. The upturn in inflows, though, was quite modest as a surge in domestic personal saving largely covered the government’s heightened borrowing needs. How the reliance on foreign funds changes in 2021, when the government deficit will again be quite elevated, will depend on whether domestic personal saving remains high.

Suggested Citation

  • Thomas Klitgaard, 2021. "Is the United States Relying on Foreign Investors to Finance Its Bigger Budget Deficit?," Liberty Street Economics 20210521, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:91864
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2021/05/is-the-united-states-relying-on-foreign-investors-to-finance-its-bigger-budget-deficit.html
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    COVID-19; pandemic; budget deficits; financial flows; saving; investment; spending; balance of payments; financial account; federal government; fiscal policy;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • H0 - Public Economics - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:fip:fednls:91864. 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: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    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.