The United States as a Debtor Nation

The United States has once again entered into a period of large external imbalances. This time the current account deficit, at nearly 6 percent of GDP in 2004, is much larger than in the last episode, when the deficit peaked at about 3.5 percent of GDP in 1987. Moreover, the deficit is on track to become substantially larger over the next several years. This study examines whether the large and growing current account deficit is a problem, and if so, how problem can be solved.

William R. Cline holds a joint appointment at the Institute for International Economics, where he has been a senior fellow since 1981, and the Center for Global Development.