been considered one of the main reasons for the turbulences in the world economy since 2007. Economic theory suggests that … investigate on the mechanisms that allow the US to do so, this paper sets up a two country DGE model with asymmetric liquidity … Seigniorage and valuation effects to be able to run a continuous current account deficit. These mechanisms work in favour of their …

stabilizing valuation effects contribute as much as 31% of the external adjustment. Our theory also has asset pricing implications …