Globalization, Gluts, Innovation or Irrationality : What Explains the Easy Financing of the U.S. Current Account Deficit? »
Series: IMF Working Papers
Author(s): Ravi Balakrishnan , Volodymyr Tulin , and Tamim Bayoumi
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 July 2007
Keywords: U.S. Current Account, Financing, Home Bias, Global Savings Glut, Portfolio Balance, ICAPM, ic, bond, bonds, financial innovation
This paper examines the roles of U.S. financial innovation, financial globalization, and the savings glut hypothesis in explaining the rise in U.S. external debt, first in a portfolio balance model, and then empiri...