Robert M. La Follette School of Public Affairs

The U.S. Current Account Deficit and the Expected Share of World Output

This paper investigates the possibility that the large current account deficits of the United States are the outcome of optimizing behavior. It develops a simple long-run world equilibrium model in which the current account is determined by the expected discounted present value of its future share of world gross domestic product relative to its current share of world gross domestic product.

Additional Info

  • Volume or issue no.: La Follette School Working Paper No. 2006-007
  • Author(s): Charles Engel and John H. Rogers