Economics

[Anmol1992]

Why does current account imbalances shift financial wealth from deficit nations to surplus nations ?

 

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Anmol1992 wrote:
Why does current account imbalances shift financial wealth from deficit nations to surplus nations ?

Because those nations purchase imported goods from surplus nations. The impact is more significiant if surplus nations credit deficit nations to purchase more surplus nations’ goods. These credit lines can be established by holding banks in deficit nations countries. Vicious circle.