...current account deficit is sustainable, many factors must be examined. The amount of spending on foreign goods and foreign investment affect trade
deficit or surplus which, in theory, directly affects the current account. Productivity affects
the current account when investment occurs in order to increase future output. According to
Economic Review, First Quarter 2001, “economic theory predicts that if a country
experiences an investment boom as a result of increased productivity, while its trading
partners do not, its current account deficit should widen.” Catherine Mann suggests that
current account deficit can indicate that a nation... Sustainable Deficit In considering whether the U.S....