By Global Economic Intersection Staff (Guest Post)
Simply, external deficit is money owed to non-residents. The USA’s external deficit is approximately $14 trillion and growing. Most economists generally agree that external debt growth faster than GDP cannot continue indefinitely – the arguments arise debating if the current levels are in a danger zone. The International Monetary Fund (IMF) has postulated that government fiscal austerity of one percent can reduce external deficit up to 1% – but any reduction will be diminished if: Nominal exchange rate is fixed; The scope for monetary…
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