Economic theory at a glance

Seth Ackerman SAckerman at FAIR.org
Wed Apr 18 14:24:13 PDT 2001



>From the Financial Markets Center's latest Fed research roundup:
http://www.fmcenter.org/pdf/roundup01Q1web.pdf

In a San Francisco Fed Economic Letter, UC Davis professor Paul Bergin approvingly cites "standard economic theories" suggesting "that any current account deficit that arises exclusively from the actions of private agents in this context must be optimal in the sense that it is improving the welfare of people in the economy." However, "if government action rather than purely private behavior is the underlying cause of the current account deficit, the argument stated previously for not worrying would no longer apply."



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