The US Current Account Deficit: Stocktaking and Remedies

In 2004, the US current account deficit widened to US $668.1 billion and 5.7 per cent of gross domestic product (GDP). These numbers, unprecedented both in absolute and relative terms, have led many observers to doubt the stability of the status quo. To avoid a major crisis resulting from a disorderly adjustment, questions must be answered concerning appropriate policy initiatives to ensure a more benign correction of external imbalances.