Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25850
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dc.contributor.authorStein, Jerome L.en_US
dc.date.accessioned2006-10-11en_US
dc.date.accessioned2009-07-28T08:12:54Z-
dc.date.available2009-07-28T08:12:54Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/25850-
dc.description.abstractThe Pessimists and the Optimists disagree whether the US external deficits and the associated buildup of US net foreign liabilities are problems that require urgent attention. A warning signal should be that the debt ratio deviates significantly from the optimal ratio. The optimal debt ratio or debt burden should take into account the vulnerability of consumption to shocks from the productivity of capital, the interest rate and exchange rate. The optimal debt ratio is derived from inter-temporal optimization using Dynamic Programming, because the shocks are unpredictable, and it is essential to have a feedback control mechanism. The optimal ratio depends upon the risk adjusted net return and risk aversion both at home and abroad. On the basis of alternative estimates, we conclude that the Pessimists' fears are justified on the basis of trends. The trend of the actual debt ratio is higher than that of the optimal ratio. The Optimists are correct that the current debt ratio is not a menace, because the current level of the debt ratio is not above the corresponding level of the optimum ratio.en_US
dc.language.isoengen_US
dc.publisher|aCenter for Economic Studies and Ifo Institute (CESifo) |cMunichen_US
dc.relation.ispartofseries|aCESifo working paper|x1805en_US
dc.subject.jelC61en_US
dc.subject.jelF32en_US
dc.subject.jelF34en_US
dc.subject.jelF37en_US
dc.subject.ddc330en_US
dc.subject.stwLeistungsbilanzen_US
dc.subject.stwZahlungsbilanzungleichgewichten_US
dc.subject.stwAuslandsverschuldungen_US
dc.subject.stwKontrolltheorieen_US
dc.subject.stwDynamische Optimierungen_US
dc.subject.stwUSAen_US
dc.titleUnited States current account deficits: a stochastic optimal control analysisen_US
dc.type|aWorking Paperen_US
dc.identifier.ppn51858013Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-

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