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    MIT14 02S14 Current Account

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    Paul Owen
    The US had a trade deficit of $374 billion in 2009. It received $350 billion in revenue from foreign assets owned by US residents, but paid $230 billion to foreign residents on US assets they owned. With additional outflows of $124 billion for foreign grants and aid, the current account deficit was $378 billion. This deficit was financed by US residents increasing their foreign assets by $1,222 billion while foreign residents increased their US assets by $1,600 billion, decreasing the net foreign assets of the US by $378 billion.

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    MIT14 02S14 Current Account

    Uploaded by

    Paul Owen
    19 views5 pages
    The US had a trade deficit of $374 billion in 2009. It received $350 billion in revenue from foreign assets owned by US residents, but paid $230 billion to foreign residents on US assets they owned. With additional outflows of $124 billion for foreign grants and aid, the current account deficit was $378 billion. This deficit was financed by US residents increasing their foreign assets by $1,222 billion while foreign residents increased their US assets by $1,600 billion, decreasing the net foreign assets of the US by $378 billion.

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    MIT Maths for Economics

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    The US had a trade deficit of $374 billion in 2009. It received $350 billion in revenue from foreign assets owned by US residents, but paid $230 billion to foreign residents on US assets they owned. With additional outflows of $124 billion for foreign grants and aid, the current account deficit was $378 billion. This deficit was financed by US residents increasing their foreign assets by $1,222 billion while foreign residents increased their US assets by $1,600 billion, decreasing the net foreign assets of the US by $378 billion.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    19 views5 pages

    MIT14 02S14 Current Account

    Uploaded by

    Paul Owen
    The US had a trade deficit of $374 billion in 2009. It received $350 billion in revenue from foreign assets owned by US residents, but paid $230 billion to foreign residents on US assets they owned. With additional outflows of $124 billion for foreign grants and aid, the current account deficit was $378 billion. This deficit was financed by US residents increasing their foreign assets by $1,222 billion while foreign residents increased their US assets by $1,600 billion, decreasing the net foreign assets of the US by $378 billion.

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    U.S.

    Trade Balance and Current Account in 2009

    14.02 Lecture Notes

    April 2, 2014

    14.02 Lecture Notes () U.S. Trade Balance and Current Account in 2009 April 2, 2014 1/4
    The U.S. trade balance and current account in 2009

    TB = X - IM = - 374 US $ bl
    + r A = + 350 US $ bl, revenue from foreign assets owned by US
    residents, A
    - rA = - 230 US $ bl, revenue paid to US residents on the US assets
    they own, A
    - grants and aid to foreign countries = - 124 US $ bl
    current account = TB + r A - rA - grants= - 378 U.S.$bl
    with A = 19,200 US$ bl, A= 22,800 US$bl, this implies r=1%, r =1,8%.
    US privilege: rr : the return the US pays on its international debt is
    smaller than the return it receives from its international investments

    14.02 Lecture Notes () U.S. Trade Balance and Current Account in 2009 April 2, 2014 2/4
    Financing the U.S. current account in 2009

    increase in foreign assets owned by US residents (A ): + 1,222 US $ bl

    increase in US assets owned by foreign residents (A) : - 1,600 US $ bl

    change in net external US assets (A A) = CA - 378 US $ bl

    14.02 Lecture Notes () U.S. Trade Balance and Current Account in 2009 April 2, 2014 3/4
    US Net Foreign Assets

    Figure is in the public domain courtesy of U.S. Bureau of Economic Analysis. Used with permission.

    14.02 Lecture Notes () U.S. Trade Balance and Current Account in 2009 April 2, 2014 4/4
    MIT OpenCourseWare
    http://ocw.mit.edu

    14.02 Principles of Macroeconomics


    Spring 2014

    For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .

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