Resolving the global imbalance
Subtitle: the dollar and the U.S. saving rate
By: Martin S. Feldstein.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13952; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13952.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "The large trade and current account deficits of the United States cannot continue indefinitely because doing so would constitute a permanent gift to the U.S.  economy.  The process that will cause this gift to shrink and that will eventually cause it to reverse is a fall in the dollar.  The dollar will fall as private investors and governments become unwilling to accept the risk of increasing amounts of dollars in their portfolios, especially in a context in which they realize that the dollar must fall to reduce the trade imbalance.  Although a more competitive dollar is the mechanism that will cause the U.S.  trade deficit to decline, the fundamental requirement for a lower trade deficit is an increase in the U.S.  national saving rate.  So a rise will be driven by higher household savings of the coming years as the two primary forces that depressed savings in recent years are reversed: the exceptionally rapid rise in household wealth and the high level of mortgage refinancing with equity withdrawal"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 7/2/2008.

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