A quantitative assessment of the decline in the U.S. current account

Low frequency changes in the U.S. current account can be understood in terms of the influence of differences in productivity growth rates across time and across countries using standard growth theory. In particular, the secular decline is primarily driven by the increase in the U.S. TFP growth rate relative to its trading partners. Differences in population growth rates or fiscal policy have no significant effects on the low frequency changes in the U.S. current account.