Current account determination and policy implications: what have we learned?

Current account deficits have featured prominently in a number of emerging-market turbulences since the mid-nineties. More recently, the US current account deficit has become a matter of concern. Not only is it presently quite large in relation to the US GDP, it has also been on a widening trend since at least the early 2000s. Reversals so far have been shortlived. While this has been the subject of theoretical discussions for some time now, in recent months the foreign exchange markets also started to react to the global imbalances. This volume covers some of the results of the 2nd INFER Workshop on International Economics “Current Account Determination and Policy Implications: What have we learned?” that was held in Frankfurt/Main, Germany on October 15th, 2004. Objective of this workshop was the application of modern macroeconomic techniques to current account problems.