Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for the ‘Little Book of Economics’ Category

Budget deficit vs current account deficit

with 5 comments

A reader of “The Little Book of Economics” asks  the following :

“All else equal, does a larger budget deficit imply a larger current account deficit?”

Chapter 7 of my book (“All the world’s an ATM”) notes that when a country spends more than it earns, it must borrow the difference from abroad, or sell foreigners some assets. This produces a current account deficit. Here, I’ll explain how domestic behavior produces a current account deficit. Read the rest of this entry »


Written by gregip

December 31, 2010 at 6:59 pm