TY  - JOUR
AU  - Curcuru, Stephanie E
AU  - Thomas, Charles P
AU  - Warnock, Francis E
TI  - Current Account Sustainability and Relative Reliability
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14295
PY  - 2008
Y2  - September 2008
DO  - 10.3386/w14295
UR  - http://www.nber.org/papers/w14295
L1  - http://www.nber.org/papers/w14295.pdf
N1  - Author contact info:
Stephanie E. Curcuru
Board of Governors
of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551
E-Mail: stephanie.e.curcuru@frb.gov

Charles P. Thomas
Board of Governors
of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington DC 20551
E-Mail: charles.thomas@frb.gov

Francis E. Warnock
Darden Business School
University of Virginia
Charlottesville, VA 22906-6550
Tel: 434/924-6076
Fax: 434/243-8945
E-Mail: warnockf@darden.virginia.edu
M1  - published as Stephanie E. Curcuru, Charles P. Thomas, Francis E. Warnock. "Current Account Sustainability and Relative Reliability," in Jeffrey Frankel and Christopher Pissarides, organizers, "NBER International Seminar on Macroeconomics 2008" University of Chicago Press (2009)

AB  - The sustainability of the large and persistent U.S. current account deficits is one of the biggest issues currently being confronted by international macroeconomists. Some very plausible theories suggest that the substantial global imbalances can continue in a benign manner, other equally plausible theories predict a disorderly resolution, and in general it is very difficult to discern between competing theories. To inform the debates, we view competing theories through the perspective of the relative reliability of the data the theories rely on. Our analysis of the dark matter theory is cursory; from a relative reliability perspective, it fails as it is built on the assumption that an item that is largely unmeasured is the most accurate component of the entire set of international accounts. Similarly, the best data currently available suggest that U.S. returns differentials are much smaller than implied by the exorbitant privilege theory. Our analysis opens up questions about potential inconsistencies in the international accounts, which we address by providing rough estimates of various holes in the accounts.
ER  -