Title: Twin Deficits and Economic Growth of US: the Theories, facts and Explanations
Abstract: The soaring current account deficit and budget deficit were highlighted in the US and the twin deficits were observed as the driving force rather than obstacle to economic growth.An empirical analysis has confirmed the positive relation between the two factors.According to open economy macroeconomics,when supply of loanable capital was boundless,a budget deficit could lead to a current account deficit in means of interest and exchange rate effects especially for the US,because the US was able to shift its budget burden to the else of the world by issuing government debt and improve the economic conditions by current account deficit which attributed to the dollar’s core position in the world.But further speaking,it was not sustainable if the seigniorage was abused for offsetting the twin deficits gaps.
Publication Year: 2012
Publication Date: 2012-01-01
Language: en
Type: article
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