Current account deficit year after year
On pages 346-348 in your International Economics textbook, Robert Carbaugh asks the the question, “Can the United States continue to run a current account deficit year after year?”
Carbaugh discusses the pros and cons of the U.S. government continually running a current account deficit. His arguments for and against current account deficits are quite compelling. Not only that, this question carries plenty of relevance being that we borrowed heavily to dig our economy out of recession.
A trade deficit can confer both positives and negatives for a country, but it all depends on the circumstances of the country involved, the policy decisions that have been made and the duration and size of the deficit. Often times the observed data and the underlying economic theory don’t line up.A current account deficit is when a country imports more goods, services, and capital than it exports. The current account measures trade plus transfers of capital.
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