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Since the trade balance (exports minus imports) is generally the biggest determinant of the current account surplus or deficit, the current account balance often displays a cyclical trend. During a strong economic expansion, import volumes typically surge; if exports are unable to grow at the same rate, the current account deficit will widen.
By definition, the cyclical deficit will be entirely repaid by a cyclical surplus at the peak of the cycle. The structural deficit is the deficit that remains across the business cycle, because the general level of government spending exceeds prevailing tax levels. The observed total budget deficit is equal to the sum of the structural deficit ...
Government deficit spending is a central point of controversy in economics, with prominent economists holding differing views. [3]The mainstream economics position is that deficit spending is desirable and necessary as part of countercyclical fiscal policy, but that there should not be a structural deficit (i.e., permanent deficit): The government should run deficits during recessions to ...
The Commerce Department's Bureau of Economic Analysis said on Wednesday the current account deficit, which measures the flow of goods, services and investments into and out of the country ...
The Commerce Department said on Friday the current account deficit, which measures the flow of goods, services and investments into and out of the country, slipped 0.1% to $104.2 billion, the ...
Ben Margot/AP By Lucia Mutikani WASHINGTON -- The U.S. current account deficit tumbled to a 14-year low in the fourth quarter as exports touched a record high, a government report showed Wednesday.
A turning point was the 1997 Asian financial crisis, where unsympathetic responses by western powers caused policy makers in emerging economies to re-assess the wisdom of relying on the free market; by 1999 the developing world as a whole stopped running current account deficits [16] while the U.S. current account deficit began to rise sharply.
The effect of the single Eurozone interest rate on the relatively high-inflation countries in the Eurozone periphery is also pro-cyclical, leading to very low or even negative real interest rates during an upturn which magnifies the boom (e.g. 'Celtic Tiger' upturn in Ireland) and property and asset price bubbles whose subsequent bust magnifies ...