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Economic Research

The Unsustainability of the U.S. Twin Deficits: Risks and Vulnerabilities in the Global Economy

Global current account imbalances are increasing rather than decreasing. The U.S. deficit was about $665 billion in 2004 and rose to $800 billiong (around 6.5% of GDP) in 2005, and it is likely to grow to over $950 billion in 2006 and well above one trillion from 2007 on.  Most other regions of the world - with the exception of Central Europe - are now running a current account surplus. Thus, with the exception of a few countries - Turkey, Australia, New Zealand, Iceland, Spain, U.K. and some central European countries[...]

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