Causes of surpluses and deficits on the current account Countries where the current account is broadly in balance… Countries which run persistent current.

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Presentation transcript:

Causes of surpluses and deficits on the current account Countries where the current account is broadly in balance… Countries which run persistent current account surpluses… Countries which run persistent current account deficits…

Causes of surpluses and deficits on the current account Natural resources Underlying competitiveness Exchange rates Inflation Investment and long term economic growth Spending by consumers and government

Why has the US run a current account deficit for decades? What impact will ‘re-shoring’ have on the US current account?

Measures to reduce imbalances on the current account Exchange rate changes Deflationary policies Supply-side policies Protectionism Currency controls How can each of these reduce the imbalance?