Order Code RL33186
CRS Report for Congress
Received through the CRS Web
Is the U.S. Current Account Deficit Sustainable?
December 13, 2005
Marc Labonte
Specialist in Macroeconomics
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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Is the U.S. Current Account Deficit Sustainable?
Summary
America’s current account (CA) deficit (the trade deficit plus net income
payments and net unilateral transfers) has been rising as a share of gross domestic
product (GDP) since 1991. In the first half of 2005, the CA deficit reached a record
high of 5.7% of GDP.
The CA deficit is financed by foreign capital inflows. Many observers have
questioned whether such inflows are sustainable and expressed concern about the
economic impact should foreign capital inflows decline rapidly. Some fear that a
rapid decline in the CA deficit could cause a recession because, presumably, a
decline in the CA deficit would trigger a sharp drop in the value of the dollar and a
rise in interest rates (which could lower asset values). However, economic theory
and empirical evidence suggest that should the CA deficit decline slowly, economic
activity would not be greatly disrupted because production in the trade sector would
be stimulated. Thus, the main issue of interest to policymakers may be whether a
decline in the deficit would be gradual or sudden.
From 2000-2002, gross foreign private capital inflows declined sharply, from
about $1 trillion to $600 billion a year. However, this reduction did not result in a
decline in the CA deficit for two reasons. First, gross private capital outflows also
declined. Second, private inflows were replaced by official inflows, as some foreign
central banks increased their foreign reserve holdings.
One long-term consequence of a large CA deficit has been the growing foreign
ownership of U.S. capital stock. A large CA deficit is not sustainable in the long run
because it increases U.S. net debt to foreigners, which cannot rise without limit. A
larger debt can be serviced only through higher borrowing or higher net exports. For
net exports to rise, all else equal, the value of the dollar must fall. This explains why
many economists believe that both the dollar and the CA deficit will fall at some
point in the future. To date, debt service has not been burdensome. Because U.S.
holdings of foreign assets have earned a higher rate of return than U.S. debt owed to
foreigners, U.S. net investment income has remained positive, despite the fact that
the United States is a net debtor nation.
Most episodes of a declining CA deficit in industrialized countries since 1980
were associated with slow economic growth. Only two episodes were associated
with a severe disruption in economic activity. Because most of the episodes involved
small countries, these cases may differ fundamentally from similar episodes in the
United States. Historically, a few other countries have had a higher net foreign debt-
to-GDP ratio than the United States has at present; however, if CA deficits continue
at current levels, the U.S. net foreign debt could be the highest ever recorded within
a few decades.
This report reviews studies on the CA deficit’s sustainability. The studies
suggest that a dollar depreciation of 10% to 56% could eventually be required to
restore sustainability. This report will be updated as events warrant.

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Contents
Economic Impact of a Declining Current Account Deficit . . . . . . . . . . . . . . 4
Historical Parallels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A Review of Three Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
List of Figures
Figure 1: Current Account Deficit as a Percentage of GDP, 1987-2004 . . . . . . . . 1

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Is the U.S. Current Account Deficit
Sustainable?
America’s current account (CA) deficit (the trade deficit plus net income
payments and net unilateral transfers) has been rising as a share of GDP since 1991
(see Figure 1). The CA has been in deficit every year but one since 1982. By
accounting identity, the CA deficit is equal to net inflows of foreign capital to the
United States and reflects the imbalance between domestic saving and investment.
In the first half of 2005, the CA deficit reached a record high of 5.7% of GDP.
Many observers have questioned whether the CA deficit is sustainable. It is not
unsustainable in the sense that it directly inhibits the economy from attaining full
employment — the United States has run large CA deficits for several years, yet
economic growth has remained above 3% in most of those years. The CA deficit has
both positive and negative effects on the economy. Production of exports and
import-competing goods is lower than it would be in the absence of a CA deficit, but
interest rates are also lower than they would be in the absence of foreign capital
inflows. As a result, interest-sensitive spending on capital investment, residential
investment, and consumer durables (e.g., automobiles and appliances) is higher.1
Figure 1: Current Account Deficit as a Percentage of GDP,
1987-2004
-6
P -5
GD -4
of -3
ge
ta -2
n
e -1
rc
0
e
P
1
1987 1989 1991 1993 1995 1997 1999 2001 2003
Source: Bureau of Economic Analysis.
Those expressing concern about the CA deficit typically define unsustainability
to mean that the CA deficit could decline very rapidly in the near future, harming the
1 For an overview, see CRS Report RL30534, America’s Current Account Deficit: Its Cause
and What It Means for the U.S. Economy, by Marc Labonte and Gail Makinen.

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CRS-2
U.S. economy. Basically, the CA deficit is sustainable as long as foreigners are
willing to continue buying American assets. But if the desirability of U.S. assets
were to change rapidly, foreign capital inflows and the value of the dollar could
decline quickly; at a minimum, foreigners would require significantly higher interest
rates than they do at present for inflows to continue.2
As long as U.S. assets yield a higher (risk-adjusted) rate of return than foreign
assets, foreigners will presumably continue to find U.S. assets attractive. Financial
markets automatically equilibrate, and if U.S. assets became less desirable, interest
rates would rise to the point where they became desirable again. Ben Bernanke, who
has been nominated to be Federal Reserve chairman, has argued that foreigners will
continue to increase their holdings of U.S. assets in the near term because of a global
saving glut that leaves them with few other desirable investment alternatives, and this
makes the CA deficit unavoidable and benign.3 If both lender and borrower are
rational, many economists believe that the CA deficit can be mutually beneficial —
it allows the lender to enjoy a higher rate of return than could be enjoyed at home and
allows the borrower to operate with a larger capital stock than could be financed from
domestic saving. As long as those investments yield a high enough rate of return to
service the debt, borrowing should not reduce future domestic income.
Some economists, however, doubt this interpretation and are concerned that the
large CA deficit4 is symptomatic of wider economic imbalance.5 They argue that a
country cannot persistently rely on foreign borrowing to finance its investment needs,
so the United States must eventually raise its low saving rate. They maintain that by
financing a large budget deficit and housing boom, much of the foreign borrowing
is being used in ways that do not expand the economy’s productive capacity, and
therefore such borrowing does not enhance our ability to service foreign debt.
Because foreign borrowing is not sustainable, they argue, Americans will eventually
be forced to drastically increase their saving (equivalently, to reduce their
consumption) and reduce their investment rates, and the U.S. economy will enter a
recession. These economists see a potential tightening of monetary and fiscal policy
as the appropriate response to an excessively large CA deficit , although this response
would risk inducing the same recession that they fear the CA deficit may eventually
cause.
2 It is widely assumed that a rapid change in the current account would be caused by changes
in financial markets, not goods markets. Although theoretically a rapid decline in imports
could also cause the CA deficit to shrink, little empirical evidence exists that trade patterns
change that quickly.
3 Ben Bernanke, “The Global Saving Glut and the U.S. Current Account Deficit,” the
Sandridge Lecture, Virginia Association of Economics, Mar. 10, 2005, available on the
Federal Reserve Board of Governors website. For an analysis, see CRS Report RL33140,
Is the U.S. Trade Deficit Caused by a Global Saving Glut?, by Marc Labonte.
4 For the purposes of this report, a CA deficit is considered large if it exceeds the growth
rate of the economy.
5 See, for example, Edwin Truman, “Postponing Global Adjustment,” Institute of
International Economics, working paper 05-6, July 2005.

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CRS-3
As a consequence of large CA deficits, a growing share of the U.S. capital stock
is owned by foreigners and a rising fraction of U.S. income will need to be diverted
overseas in the form of interest and dividends to foreigners. If the process were to
continue indefinitely, foreigners would eventually hold only American assets in their
portfolio, which is clearly unrealistic. But that does not mean that foreigners could
not further increase their share of American assets in the near term, in which case the
CA deficit would persist.6 One common assumption is that the CA deficit would, at
most, continue until the share of American assets held in foreign portfolios exceeded
America’s share of world output; by this measure, foreigners still hold too few
American assets. For example, citizens of the Euro Area hold an estimated 53% of
their wealth in Euro Area assets and 19% in U.S. assets, whereas the Japanese hold
an estimated 63% of their wealth in Japanese assets and 4% in U.S. assets.7 This is
referred to as a “home bias” in saving because all countries hold more of their own
assets, and fewer foreign assets, than optimal portfolio diversification would suggest.
Most likely, this bias will never disappear entirely, so CA deficits will probably not
continue until this benchmark is met. In any case, the reason why home bias would
decline for foreigners but not Americans remains unclear, as continuing CA deficits
would imply.
One reason that U.S. imports cannot exceed exports indefinitely (and could
eventually lead to a falling dollar) is that today’s CA deficits have a consequence for
future trade balances. The accumulation of net debt that Americans owe to
foreigners will need to be serviced in the future, which will take the form of a capital
outflow from the United States. To service that larger debt, the United States must
export more or borrow more to offset the outflow. But, all else equal, foreigners will
only be induced to buy more exports if the dollar depreciates. Net investment income
payments make up a small fraction of the CA deficit today, but economist Edwin
Truman estimates that if CA deficits continued to equal 6% of GDP, net income
payments would eventually reach 4.5% of GDP, leaving a trade deficit of only 1.5%
of GDP.8 In other words, a constant trade deficit would imply a growing CA deficit
because of growing net investment income payments.
The increase in the net debt explains why U.S. net income payments fell from
an average of $33.4 billion per year from 1979-1984 to an average of $28 billion
during 2001-2004. What is surprising about these data is that the United States still
has positive net investment income despite its large net debt. That is because U.S.
holdings of foreign assets have earned a higher rate of return than U.S. debt owed to
foreigners. Between 2002 and 2004, the United States earned an estimated rate of
return of 9.6% on its foreign assets and paid a rate of return of 0.9% on its foreign
6 Foreigners could decide to keep their holdings of U.S. assets fixed in dollar terms, which
would result in a modest trade surplus because the debt service would represent a capital
outflow.
7 Olivier Blanchard, Francesco Giavazzi, Filipa Sa, “The U.S. Current Account and the
Dollar,” Massachusetts Institute of Technology, working paper 05-02, May 2005.
8 Edwin Truman, “Postponing Global Adjustment,” Institute for International Economics,
working paper 05-6, July 2005.

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CRS-4
liabilities.9 These estimated rates of return have prevented foreign borrowing from
becoming burdensome and suggest that the U.S. net foreign debt could become
significantly larger before debt payments would become burdensome.
Economic Impact of a Declining Current Account Deficit
Although a reduction in the CA deficit is inevitable (although not necessarily
in the near future), it need not be sudden. It should be re-emphasized that economic
theory suggests that a slow decline in the CA deficit and dollar would not be
troublesome for the overall economy. In fact, a slow decline could have an
expansionary effect on the economy, because the increase in net exports would have
a more stimulative effect on aggregate demand in the short run than the decrease in
investment and other interest-sensitive spending.10 Historical experience seems to
bear this out — the CA deficit declined continually in the late 1980s, from 2.8% of
GDP in 1986 to near zero during the early 1990s. Yet economic growth was strong
throughout the late 1980s. (Of course, the adjustment required to balance the current
account today is about twice as large, so historical experience may not be a good
guide.)
A potentially serious short-term problem would emerge if foreigners suddenly
decided to reduce the fraction of their saving that goes to the United States in the
form of a capital inflow, or if they suddenly decided to repatriate part of their liquid
capital. The initial effect could be a sudden and large depreciation in the value of the
dollar, as the supply of dollars on the foreign exchange market increased, and a
sudden and large increase in U.S. interest rates, as an important source of saving was
withdrawn from the financial markets. Most likely, the direct trade effects of these
shifts in lending patterns by foreigners would not cause a recession because the dollar
depreciation would lead to a trade surplus (or smaller deficit), which expands
aggregate demand.11 However, the indirect interest rate effects, which typically offset
the direct effects only partially, could cause a recession if the change is sudden.
Large increases in interest rates could cause problems for the U.S. economy, as these
increases reduce the market value of debt securities, cause prices on the stock market
to fall, and jeopardize the solvency of various debtors. Resources may not be able
9 Philip Lane and Gian Milesi-Feretti, “A Global Perspective on External Positions,”
National Bureau of Economic Research, working paper 11589, Aug. 2005. This also
suggests that the high rate of return of U.S. assets may be more perceived than actual.
10 Truman looks at the issue from a different perspective. He argues that the CA deficit has
occurred because domestic demand has outstripped supply (production). In a closed
economy, this would be inflationary and would eventually lead to a decline in economic
growth. But Truman believes that borrowing from abroad has allowed demand to continue
to exceed supply without sparking inflation. Therefore, the CA deficit would only decline
if demand growth declines, which means that the falling CA deficit would coincide with
lower GDP growth.
11 A sharp decline in the value of the dollar would harm standards of living because it would
raise the price of imports to households. This effect, which is referred to as a decline in the
terms of trade, would not be recorded directly in GDP, however.

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CRS-5
to shift quickly enough from interest-sensitive sectors to export sectors to make this
transition fluid.12
Is a scenario where the dollar crashes a likely one? Economic theory typically
assumes that financial market participants generally act rationally. If the rationality
assumption is a good one in the current context, then the potential for a sudden
decline is slim. After all, foreigners would be demanding high rates of return to buy
U.S. assets today if they could foresee that the foreign currency value of these assets
is likely to fall sharply in the near future. However, a sudden decline in capital
inflows is unlikely to occur in a purely rational context, in which case theory would
have little predictive power. Given the traditional role the United States has played
as an investment safe haven, sudden capital outflows seem unlikely. Another factor
that makes the dollar crash scenario unlikely is its assumption that there will
suddenly be few willing buyers of U.S. assets, whereas in practice, major U.S.
financial markets always clear — at a high enough interest rate, buyers can always
be found. This suggests that the worst case scenario is likely to be a sudden, albeit
disruptive, spike in interest rates rather than a scenario where the financial system
ceases to function smoothly. The Federal Reserve could mitigate the interest spike
by reducing short-term interest rates, although this reduction would influence long-
term rates only indirectly and could increase inflation.
One could also argue that a decline in foreign demand for U.S. assets has
already occurred in recent years, with little detriment to the U.S. economy.13 From
2000 to 2002, gross private capital inflows fell from about $1 trillion to $600 billion
annually. But this caused no corresponding decline in the CA deficit for two reasons.
First, gross private outflows fell by a similar amount over that period. In this case,
it was not U.S. assets in particular that became less attractive, but foreign investment
worldwide. Second, private capital inflows were replaced by official capital inflows,
as foreign central banks began financing a large portion of the U.S. CA deficit. Had
these central banks not decided to increase their foreign reserves, the CA deficit
might have fallen and the value of the dollar might have fallen more significantly.
It is worth noting, however, that although the dollar did not experience a sizable
overall decline, it did fall significantly against certain currencies without disruption
to the U.S. economy. For example, it fell by one-third against the euro and one-
quarter against the pound from the beginning of 2002 to the beginning of 2005.
Since 2003, private capital inflows have begun to rise again. Nevertheless,
official inflows continue to account for a large source of net inflows. Because
official inflows are likely financed by considerations other than rate of return, it is
12 For a more formal explanation, see J. Bradford DeLong, “Some Simple Analytics for a
‘Hard Landing’,” working paper, University of California at Berkeley, April 2005.
Interestingly, one study found that countries with larger declines in the CA deficit
experienced, on average, higher GDP growth. See Hilary Croke, Steven Kamin, and Sylvain
Leduc, “Financial Market Developments and Economic Activity During Current Account
Adjustments,” International Finance Discussion Papers, Federal Reserve, no. 827, Feb.
2005.
13 For more information, see CRS Report RS21951, Changing Causes of the U.S. Trade
Deficit, by Marc Labonte and Gail Makinen.

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difficult to predict how sustainable they will be in the future. If foreign central banks
reacted differently to a future decline in private inflows, the consequences for the
U.S. economy could be quite different. But given the importance of the United States
as a foreign export market, it is difficult to imagine that it would be in any country’s
economic self-interest to take a step that could potentially precipitate a U.S.
economic crisis.
Historical Parallels
Most comparisons to historical experience abroad are limited by the fact that the
United States economy is so much larger than those of other countries. As a result,
economic development in the United States has ramifications for the world economy
that could have feedback effects for the U.S. economy, whereas changes in the CA
balance of most small countries will most likely not affect the world economy.
Another difference is the role that the dollar plays as the world’s “reserve currency.”
Because the dollar is the world’s preferred currency for a store of value, medium of
exchange, and unit of account, holders may be less willing to abandon it than they
would any other currency. If so, the U.S. may be able to run higher sustainable CA
deficits than other countries.
In the developing world, a large CA deficit has often been a leading indicator
of financial and currency crisis. This was the case in many recent crises, including
Mexico, East Asia, Turkey, Brazil, and Argentina. The applicability of these
experiences to the United States may be limited, however, because the United States
has a flexible exchange rate regime (and so does not have to defend its currency with
foreign exchange reserves), is seen as a”safe haven” for investment, and, unlike
developing countries, is able to borrow in its own currency (so that depreciation
reduces rather than increases the burden of servicing its debt14). Therefore, historical
comparisons have tended to focus on the experience of other industrialized countries.
To determine how long a CA deficit can be sustained, economists Maurice
Obstfeld and Kenneth Rogoff looked at the net debt owed to foreigners as a
percentage of GDP. They found that in 2003, this measure was about 23% of GDP
for the United States, near an all-time high. Were CA deficits to continue at more
than 5% of GDP per year, U.S. debt to foreigners would reach 70% of GDP within
30 years. Although this implies a relatively small yearly debt burden, many countries
that have experienced CA reversals in the postwar period had smaller debt-to-GDP
ratios, between 20-80% of GDP. Obstfeld and Rogoff identify only one country
(Ireland) with a debt-to-GDP ratio that has exceeded 80%. Thus, the authors
conclude that large U.S. CA deficits can not be sustained indefinitely.15
14 In dollar terms, depreciation would not affect the value of dollar-denominated liabilities.
However, in foreign currency terms or in terms of the purchasing power that it conveys to
foreign lenders, depreciation reduces the value of U.S. liabilities.
15 Maurice Obstfeld and Kenneth Rogoff, “The Unsustainable U.S. Current Account
Position Revisited,” National Bureau of Economic Research, working paper 10869, Oct.
2004.

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Economist Sebastian Edwards found that since 1970, only two other developed
countries, Ireland and New Zealand, had high CA deficits that were long-lasting
(seven and five years, respectively). He found that large countries that experienced
sharp declines in their CA also saw per capita GDP growth decline by 3.6% to
5.0%.16
Goldman Sachs analyzed all episodes in developed countries since 1980 where
the CA improved by more than 2% of GDP. It found 31 cases where the adjustment
proved harmful to the economy and 13 where it proved benign. In the harmful
episodes, the economy typically started from a position of overheating and the output
gap (the difference between actual and potential output) worsened by an average of
3.6% of GDP, whereas in the benign episodes, the economy started from a position
of excess capacity and the output gap improved by 1.9%. The fact that the economy
was initially overheating in the harmful episodes suggests that causality may run in
the opposite direction — the CA shift may be a symptom rather than a cause of
economic slowdown. In the harmful cases, there was little real exchange rate
depreciation; in the benign cases, it averaged 5.1%. In most cases, the adjustment
took several years. In all cases, consumption growth was negative on average and
(surprisingly) interest rates on average fell. In only two cases (Portugal in the early
1980s and Finland in the early 1990s) was the CA decline associated with a severe
recession. (The recession and CA decline in Finland were widely attributed to the
collapse of the Soviet Union.) Some of these cases may not be applicable to the U.S.
experience, however, because the sample includes countries that had a small CA
deficit or CA surplus. Only eight of these episodes involved a larger CA deficit as
a share of GDP than the U.S. deficit today, and all of these eight episodes involved
small countries.17
In a similar study, Debelle and Galati found little evidence that CA adjustments
historically lead to significant disruption in financial markets. They found little
change in the composition of capital flows before adjustment, which they argue is
evidence that current account adjustment is caused by, rather than the cause of,
broader macroeconomic imbalances.18
A Review of Three Estimates
Three recent academic papers address the sustainability issue. It should be
noted that in all three papers, the models are not empirically derived; they are
simulations based on theoretical assumptions meant to be consistent with reality.
16 Sebastian Edwards, “Is the Current Account Deficit Sustainable?” National Bureau of
Economic Research, working paper 11541, Aug. 2005.
17 Dominic Wilson and Roopa Purushothaman, “Do Current Account Adjustments Have to
Be Painful?” Global Economics Weekly, Goldman Sachs, no. 05/04, Feb. 2005. Similar
results are found in Hilary Croke, Steven Kamin, and Sylvain Leduc, “Financial Market
Developments and Economic Activity During Current Account Adjustments,” International
Finance Discussion Papers, Federal Reserve, no. 827, Feb. 2005.
18 Guy Debelle and Gabriele Galati, “Current Account Adjustments and Capital Flows,”
Bank of International Settlements, working paper 169, Feb. 2005.

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Obstfeld and Rogoff have estimated how much the dollar would depreciate were
the CA deficit to disappear. In their model, shocks to aggregate demand or shifts in
the demand or supply of tradeable goods could cause the CA deficit to decline; they
do not model exogenous changes in the demand for U.S. assets affecting the CA
deficit. They estimate that the real exchange rate would depreciate between 14.7%
and 33.6% if the CA deficit were eliminated by a change in aggregate demand, and
between 9.8% and 25.5% if eliminated by a change in the supply of tradeable goods.
They estimate that depreciation would be accompanied by a decline in the terms of
trade between 3.9% and 7.1%. The predicted dollar depreciation is so large because
about three-quarters of U.S. output is nontradeable, production cannot be quickly
shifted into tradeable goods to take advantage of the depreciation, and import and
export prices change much more slowly than the exchange rate. This model does not
predict how much larger the CA deficit could get or how quickly it will eventually
fall.19
Blanchard et al. explicitly allow asset demand to influence the exchange rate,
and they assume that assets from different countries are not perfect substitutes. In
their model, a CA deficit would eventually decline because demand for U.S. assets
is finite. Although an increase in the demand for U.S. assets would initially cause the
dollar to appreciate, they argue, it would later depreciate to finance debt service
(though it would remain above its pre-appreciation value). They estimate that a 15%
decline in the dollar would be associated with a decline in the CA deficit equal to
1.4% of GDP. About one-third of the decline in the CA deficit results from U.S. debt
being denominated in U.S. dollars, because a depreciation reduces its value.
Blanchard et al. estimate that stabilizing the net-debt-to-GDP ratio at current levels
would require the dollar to immediately depreciate by 56% and the CA deficit to
decline to 0.75% of GDP. However, assuming foreigners desire to maintain holdings
of U.S. assets at their current share, their model predicts that the depreciation would
be stretched over a few decades, depreciating by 2.7% a year, at most. If foreigners
decided to reduce their holding of U.S. assets, the model predicts a larger, but still
gradual, depreciation.20
Edwards uses a similar model to simulate how much the dollar would depreciate
depending on different assumptions about the foreign demand for U.S. assets. Unlike
Blanchard et al, he projects fairly rapid declines in the CA deficit and dollar in the
future. Under his optimistic scenario, in which he assumes that the U.S. net debt will
rise to 60% of GDP by 2010 and then remain constant, the CA deficit would peak at
7.3% of GDP in four years, before eventually declining to 3.2% of GDP (with most
of the decline occurring in the first four years after the peak). The real value of the
dollar would appreciate while the deficit was increasing, but it would decline 21%
in the first three years after the deficit began falling. If net debt were to decline to
50% of GDP after 2010 instead of remaining at 60% of GDP, which would still be
19 Maurice Obstfeld and Kenneth Rogoff, “The Unsustainable U.S. Current Account
Position Revisited,” National Bureau of Economic Research, working paper 10869, Oct.
2004. The CA deficit was only 5% of GDP at the time of their paper, so their dollar
depreciation estimates would now be larger.
20 Olivier Blanchard, Francesco Giavazzi, Filipa Sa, “The U.S. Current Account and the
Dollar,” Massachusetts Institute of Technology, working paper 05-02, May 2005.

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about double its current level, the decline in the CA deficit and dollar would be
greater. Edwards calculates that the deficit would fall by 5.3% of GDP and the dollar
would depreciate by 28% after three years, which would bring both measures close
to their long-term projected levels.21
The wide dispersion of estimates on the dollar depreciation associated with a
decline in the CA deficit points to the complex and imperfectly understood factors
that determine the dollar’s value, the lack of a consensus exchange rate model that
performs well empirically, and the sensitivity of theoretical models to changes in
uncertain empirical parameters. Furthermore, no model can answer the underlying
question of how much and how quickly the CA deficit will potentially decline
21 Sebastian Edwards, “Is the CA Deficit Sustainable?” National Bureau of Economic
Research, working paper 11541, Aug. 2005.

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