Summary

Although substantial current account deficits can be sustained indefinitely, large deficits in goods and services trade cannot be. Even to stabilise the current account deficit, the United States must restore balance in goods and services trade within a decade or so. If this adjustment is to be achieved without a crisis, a range of policy adjustments will be needed. Options include a managed devaluation of the US dollar, substantial increases in public and household saving and initiatives to reduce reliance on imported oil and gas.

Erratum

In paragraph 2, page 7, the text should read "the appreciation of the yen" instead of "the depreciation of the yen".

Recommended Citation

Quiggin, John (2004) "The Unsustainability of U.S. Trade Deficits," The Economists' Voice: Vol. 1 : Iss. 3, Article 2.
Available at: http://www.bepress.com/ev/vol1/iss3/art2