The Current Account of the United States, Japan, and Germany: A Cyclical Analysis

Abstract

The current account positions of the major industrial countries have undergone very large swings in the past three years. Most observers now expect the U.S. current account, which was in surplus in 1981, to show a record deficit in 1983, and an even larger deficit in 1984. Swings in the Japanese and German current accounts have been equally dramatic in the opposite direciton, moving from deficit to surplus. The possible continuation of these deficits is a source of concern to policymakers to the extent, for example, that they and factors underlying them give rise to protectionist pressures or involve significant adjustment costs in tradable goods sectors.