The U.S. current account deficit was at a record level in 1999 and is expected to increase further in 2000. How large can this deficit get? Will an eventual adjustment in the deficit place the U.S. economy at risk? This article examines three arguments often put forth to explain the increase in...

The U.S. deficit in international trade soared to new heights in 1998, again in 1999, and in all likelihood, will increase even further this year. Mirroring these deficits have been huge foreign capital inflows. In 1999, the U.S. current account deficit, that is, the difference between exports...