Sustainability of the current account of the USA and Brazil and the role of the difference between the rates of return on assets and external liabilities
DOI:
https://doi.org/10.11606/1980-5330/ea172350Keywords:
trade balance, net foreign assets, sustainability of external accountsAbstract
This paper analyses the behavior of the external accounts of the United States and Brazil from1970 to 2017, aiming to understand if the trajectory of the current account of the country is sustainable on a long-term basis. There is evidence of explosive behavior by US foreign assets and liabilities. If the country’s assets abroad continue to have a higher rate of return than the rate that remunerates its foreign liabilities, the country will be able to continue with a deficit in the trade balance while remaining solvent. As for Brazil, the evidence shows external solvency.
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