TY  - JOUR
AU  - Edwards,Sebastian
TI  - The End of Large Current Account Deficits, 1970-2002: Are There Lessons for the United States?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11669
PY  - 2005
Y2  - October 2005
UR  - http://www.nber.org/papers/w11669
L1  - http://www.nber.org/papers/w11669.pdf
N1  - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
M2  - featured in NBER digest on 2005-10-03
AB  - 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.
ER  -