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THE LEVY ECONOMICS INSTITUTE OF BARD COLLEGE
GLOBAL IMBALANCES:
The U.S. and the Rest of the World
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FIGURE 1 Monthly U.S. Trade Deficit in Goods
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FIGURE 2 Trade Deficit in Goods as a % of GDP
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FIGURE 3 Annual U.S. Trade Deficit in Goods
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THE CONCEPTUAL FRAMEWORK
Accounting Identity of Financial Balances
Current
Account
Balance
=
{
+
Government
Balance
{
Private
Sector
Balance
Internal
Financial Balance
External
Financial Balance
In 2006 the identity was roughly like this:
-3% of GDP -2.4% of GDP = -5.4% of GDP
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FIGURE 4 U.S. Main Sector Balances
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FIGURE 5 Main Sector Balances with CBO Assumptions
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FIGURE 6 Household Debt Outstanding
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FIGURE 7 Household Borrowing
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FIGURE 8 U.S. Main Sector Balances under the Assumption
of Stabilizing Household Debt
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FIGURE 9
U.S. Main Sector Balances under the Assumptions
of Further Dollar Devaluation and Expansionary Fiscal Policy
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