U.S. International Deficits, Debt, and Income Payments: Key Relationships Affecting the Outlook
Alternative Scenarios Illustrate The Risks
By John Kitchen
John Kitchen is an economist with the Office of Management and Budget, Executive Office of the President. He recently served as Chief Economist of the House Budget Committee, and previously held positions in the Department of the Treasury, the Council of Economic Advisers, the Economic Research Service, and Washington and Jefferson College. He received his Ph.D. and M.A. in economics from the University of Pittsburgh and his B.A. in economics and history from the College of William and Mary in Virginia.
A variety of issues and relationships will be of fundamental importance in determining the future paths of the U.S. current account, international debt position, and net international income flows. This paper describes the key relationships and presents projection results that illustrate the sensitivity of the outcomes to those relationships. Although the base case scenario presented in the paper shows a relatively benign outcome based on Blue Chip projections and the likely continuation of historical relationships, alternative projections help to illustrate the risks—and the potential sources of those risks— for a more adverse outcome for U.S. international deficits, debt and income flows.
Any views or opinions expressed in this paper are those of the author and do not necessarily represent those of the Office of Management and Budget or any other institution. This paper reports discussion and results based on a presentation at the Annual Meetings of the National Association for Business Economics in September 2006.
By John Kitchen