The Current Account Deficit and the US Housing …978-1-137-54789-7/1/1.pdf · The Current Account...
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PART I The Current Account Deficit and the US Housing Boom: Establishing the Connections I n part I, present corroborating evidence showing that the unprecedentedly large US current account deficit was both a necessary condition and the most important contributory cause of the US housing boom that extended from approximately 2003 to 2007. Chapter 1 recounts China’s emergence as a major trading nation by the late twentieth century and the motivation behind its policy of running trade sur- pluses. Chapter 2 reviews both historical and contemporary studies of the causal factors that lie behind the recurring pattern of credit-fueled booms followed by financial crises, and shows the US current account deficit to have been an important cause of the US housing boom. Chapter 3 shows that the US cur- rent account deficit during the housing boom was generated by the mercan- tilist policies of foreign governments, particularly Southeast Asia and China. Chapter 4 presents a logical demonstration that the United States required a current account deficit in order to have sustained a boom of a large magnitude such as the housing boom.
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Transcript of The Current Account Deficit and the US Housing …978-1-137-54789-7/1/1.pdf · The Current Account...
PART I
The Current Account Deficit and the US Housing Boom: Establishing the Connections
In part I, present corroborating evidence showing that the unprecedentedly large US current account deficit was both a necessary condition and the most important contributory cause of the US housing boom that extended
from approximately 2003 to 2007. Chapter 1 recounts China’s emergence as a major trading nation by the late
twentieth century and the motivation behind its policy of running trade sur-pluses. Chapter 2 reviews both historical and contemporary studies of the causal factors that lie behind the recurring pattern of credit-fueled booms followed by financial crises, and shows the US current account deficit to have been an important cause of the US housing boom. Chapter 3 shows that the US cur-rent account deficit during the housing boom was generated by the mercan-tilist policies of foreign governments, particularly Southeast Asia and China. Chapter 4 presents a logical demonstration that the United States required a current account deficit in order to have sustained a boom of a large magnitude such as the housing boom.
