Fiscal Factors Driving Global Imbalances, U.S. Deficit Likely to Persist
Global current account imbalances have reappeared, but they are different from before. Fiscal factors, not just saving glut, drive these imbalances. Recent imbalances are influenced by fiscal policies, especially in the U.S. and Germany. Financial factors are increasingly important in determining current account movements. Policy actions can impact global imbalances, but some U.S. deficit is likely to persist due to its role in creating safe assets.