Saturday, July 17, 2010

United States - International Balance of Payments

Explains the contradictory situation which the United States faces: enjoys being a net recipient of interest payments despite a large external debt.

Carbaugh (2009) mentions that during a recession, both saving and investment tend to fall within an affected country. Th United States was able to recover its economy rapidly by mortgaging part of its wealth to foreigners during its recession of the early 1980s: its political stability and relatively high interest rates attracted investors from other countries to invest their funds in the United States. These funds were more than what the United States residents invested abroad. However, after World War I (1987), the United States had, for the first time incurred $23 billion and become a debtor nation...Read more>>

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