The USA As The 'Demander Of Last Resort' And The Implications For China'S Current Account

Aizenman, Joshua; Jinjarak, Yothin

Abstract

The present paper evaluates the current account patterns of 69 countries during 1981-2006. We identify an asymmetric effect of the USA as the 'demander of last resort': a 1% increase in the lagged US imports/GDP is associated with a 0.3% increase in current account surpluses of countries running surpluses, but results in insignificant changes in the current accounts of countries running deficits. The impact of US demand variables is larger on the current accounts of developing countries than that of OECD countries. We also contemplate China's current account over the next 6 years, and project a large drop in its current account/GDP surpluses.

Citation

Aizenman, J., & Jinjarak, Y. (2009). The USA As The 'Demander Of Last Resort' And The Implications For China'S Current Account. Pacific Economic Review, 14(3), 426-442. https://doi.org/10.1111/j.1468-0106.2009.00450.x

• Journal Article Type: Article
• Publication Date: Aug 1, 2009
• Deposit Date: Aug 25, 2010
• Publicly Available Date: Mar 10, 2025
• Journal: Pacific Economic Review
• Print ISSN: 1361-374X
• Electronic ISSN: 1468-0106
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 14
• Issue: 3
• Pages: 426-442
• DOI: https://doi.org/10.1111/j.1468-0106.2009.00450.x