Hard to Explain Current U.S. Account Gap – Fed Study

The Asian financial crisis of the late 1990s can explain the emergence of large current account surpluses in the region, but fails to explain why the United States faces a deficit, a Federal Reserve study found.

Joseph Gruber and Steven Kamin, two researchers at the Fed’s Washington-based board, said that while conventional economic models do not explain the burgeoning Asian surpluses, a model altered to account for financial crises did.