Working Paper: NBER ID: w3313
Authors: John F. Helliwell
Abstract: This paper first surveys a number of partial and macroeconomic approaches to the determination of the current account, and then summarizes the evidence from multicountry economic models about the linkages between U.S. government spending and the U.S. current account during the 1 980s. The available evidence from a large number of multicountry models suggests that the U.S. fiscal policy of the first half of the 1980s was responsible for about half of the buildup in the external deficit, and that the accumulated net foreign debt is about 500 billion dollars higher than it would have been without the fiscal expansion.
Keywords: Fiscal Policy; External Deficit; Current Account
JEL Codes: E62; F32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. fiscal policy in the early 1980s (E65) | external deficit (H62) |
| government spending (H59) | external deficit (H62) |
| U.S. fiscal policy in the early 1980s (E65) | accumulated net foreign debt (F34) |