Current Account Balance

   

The strange case of Taiwan and its life insurance industry.

East Asia (China, Japan, and the NIEs) ran a $600 billion current account surplus in 2017. "Official" (central bank and sovereign fund) outflows accounted for about half of that. Asia's foreign exchange market intervention isn't as overt as it once was, but also hasn't entirely gone away.

Reserve growth stopped as private investors in Europe and Japan started buying a lot of the rest of the world's bonds.

There are growing calls for a global coalition of U.S. allies to pressure China to change some of its most egregious commercial practices. That makes some sense, even if it is much easier said tha…

China seems to be aiming to cut its (central government) fiscal deficit to around 2.6 percent of GDP. That’s the new target—down from a three percent target last year (UBS think the actual deficit in…

The U.S. currently runs a surplus on investment income of about 1 percent of GDP, as the income on U.S. equity investment abroad (inflated by tax arbitrage) exceeds the interest the U.S. pays on its external debt. That surplus could shrink significantly as interest rates rise.

It is a useful indicator (even for the U.S.)

Warning: long, wonky, and not for the fainthearted. I try to assess how the international reforms will impact where firms book profits and thus the measured trade and income balance, not just the mechanical impact of a higher fiscal deficit.

Arguing China’s credit growth is too high in effect is arguing that the post-crisis fall in China’s external surplus isn’t sustainable.

Giving macroeconomic policy advice to a country that saves 46 percent of its GDP is hard. Imprudent domestic policies help limit large external (trade) imbalances, and more prudent domestic policies could result in a return to large external imbalances.   Policy changes to reduce national savings are critical.

Comments on an important new Federal Reserve Working Paper by Anna Wong