The U.S. Current Account Deficit

This thesis tries to explain the sustainability of the U.S. current account deficit and its cyclical adjustment according to the status of the U.S. dollar in the international monetary system.The thesis contains seven chapters. Chapter one is the preface. In this preface, a comprehensive introduction is displayed on the background and goal of this research, relevant theories and research methods, as well as the main viewpoint of the whole paper.The second chapter recalls evolution of the international monetary system and finds that the internal and external conflicts in states issuing international currencies have different characteristics from ordinary States since the collapse of gold-based system. In the existing international monetary system, the U.S. dollar is still the major international currency. Target of the U.S.A is to maintain the existing status in the international monetary system of the U.S dollar.The third chapter comes to review and examine the related theories, according to the relationship between the status of the U.S. dollar in the international monetary system and the balance of payments in the United States. Then Test factors that influence the current account deficit in U.S.A., such as monetary and financial policies, and the speed of development in international trade of America, etc. It is found that these theories have been unable to explain the U.S. current account deficit well.The fourth chapter explores the change of savings behavior of different economic subjects in the United States. We find that the U.S. current account deficit was mainly caused by negative saving rates of the United States government between the 70s and the 80s in the 20th century. Since the 1980s, the U.S. current account deficit is mainly caused by the continuous drop of the personal saving rates that is the result of inflows of the scale of international capital. Therefore, the key to explain the current account deficit since the 1980s is to interpret the large-scale capital inflow in the United States. The fifth chapter devoted effort to the foreign economic policy of the United States. First, it expounded that the U.S. current account deficit poses a potential threat against the goal of internal and external equilibrium. Then states the goal and policy for adjusting international payment of the Unites States on the basis of America's target of the external equilibrium goal, and make compliments on the balance-of-payments adjustment from the perspective of the United States itself.The sixth Chapter analyzes the influence of the foreign economic policy of the United States on the international monetary environment, economic policies of other countries, as well as the impact of these reactions on current account balance of America. It is revealed that current account deficit of the United States is mainly caused by its own foreign economic policy. The reactions of other countries have different influence on current account balance of America, as well as its policies.The last Chapter brings forward some pieces of policy advice. These suggestions aim at the international economic policy coordination related to the adjustment of the United States as to its current account deficit and the corresponding policy options of China.In summary, the sustainability and the cyclical adjustment of the current account deficit in U.S.A. in the current international monetary is the result of the contradictory policies of the United States and reaction of other countries in the existing international monetary system. Actually, not only the expanding financial and monetary policies but also the contradictory policies of the United States may cause the current account deficit in America, which has been proved by what happened in America in the 1980s.The main innovations of this thesis are as following:1. Pointing out that in the current international monetary system the United State is to keep the U.S. dollar's existing International Monetary status, and analyzing foreign economic strategy and policy options of the United States.2. Pointing out that the criteria of judging whether the current account deficit in America is sustainable is to see whether it impacts on the United States'target of internal and external equilibrium, and analyzing the necessity and urgency to adjust the U.S. current account deficit.3. When analyzing economic strategy and policy choices of other countries, divide them into two groups of countries according to the currency competition with dollar: ordinary States and other economic powers, and focus on the options of developing countries and other developed countries.