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How Long Can the Unsustainable U.S. Current Account Deficit Be Sustained?

Carol C. Bertaut, Steven B. Kamin, and Charles P. Thomas*

NOTE: International Finance Discussion Papers are preliminary materials circulated to stimulate discussion and critical comment. References in publications to International Finance Discussion Papers (other than an acknowledgment that the writer has had access to unpublished material) should be cleared with the author or authors. Recent IFDPs are available on the Web at http://www.federalreserve.gov/pubs/ifdp/. This paper can be downloaded without charge from the Social Science Research Network electronic library at http://www.ssrn.com/.

Abstract:

This paper addresses three questions about the prospects for the U.S. current account deficit. Is it sustainable in the long term? If not, how long will it take for measures of external debt and debt service to reach levels that could prompt some pullback by global investors? And if and when such levels are breached, how readily would asset prices respond and the current account start to narrow?

To address these questions, we start with projections of a detailed partial-equilibrium model of the U.S. balance of payments. Based on plausible assumptions of the key drivers of the U.S. external balance, they indicate that the current account deficit will resume widening and the negative NIIP/GDP ratio will continue to expand. However, our projections suggest that even by the year 2020, the negative NIIP/GDP ratio will be no higher than it is in several industrial economies today, and U.S. net investment income payments will remain very low. The share of U.S. claims in foreigners' portfolios will likely rise, but not to an obviously worrisome extent. All told, it seems likely it would take many years for the U.S. debt to cumulate to a level that would test global investors' willingness to extend financing.

Finally, we explore the historical responsiveness of asset prices and the current account in industrial economies to measures of external imbalances and debt. We find little evidence that, as countries' net indebtedness rises, the developments needed to correct the current account--including changes in growth rates, asset prices, or exchange rates--materialize all that rapidly.

We would emphasize that these findings do not imply that U.S. current account adjustment is necessarily many years away, as any number of factors could trigger such adjustment. Our point is rather that international balance sheet considerations likely are not sufficient, by themselves, to require external adjustment any time soon.

Keywords: Sustainability, external imbalance, dollar

JEL classification: F21, F32, F37


I  Introduction and Summary

Several years ago, as the U.S. current account deficit was expanding to record levels, observers increasingly began to focus on the unsustainability of the U.S. external imbalances, as well as the possibility that the subsequent correction would be abrupt and disorderly.1 Since peaking at 6.6 percent of GDP in the third quarter of 2006, however, the current account deficit has begun shrinking as a result of declines in the foreign exchange value of the dollar, slower U.S. GDP growth, and continued strong expansion abroad; the deficit dipped to 4.9 percent in the fourth quarter of 2007. With the reduction in the deficit and the depreciation of the dollar, which in real multilateral terms is now about 25 percent below its peak level in February 2002, concerns about a disorderly correction appear to have become less prominent. This may in part reflect a growing conviction that a correction of the current account is likely to be orderly rather than disruptive.2 It may also reflect a view that, with recent declines in the dollar and in the deficit, no further correction of the U.S. current account may be necessary.

In this paper, we address three simple questions: Is the U.S. current account now sustainable on a long-term basis? If not, how long might it take for measures of U.S. external indebtedness to expand beyond levels that global investors are willing to finance? And finally, if and when such levels are breached, how rapidly might a correction in asset prices and the current account ensue?

We start, in Section II, by discussing the most common metric for assessing current account sustainability, the stability of an economy's net debt as a share of GDP; such stability is necessary if net interest payments to foreigners are not to rise without limit as a share of income. We go on in Section III to describe projections of U.S. external balance variables and measure them against the sustainability criterion described above. The projections are based on simulations of a detailed model of the U.S. balance of payments, taking as exogenous the key drivers of the U.S. trade and current accounts: GDP growth in the United States and abroad, inflation rates, interest rates, oil prices, and the level of the real multilateral dollar. We find that, based on our model simulations, beyond the near term, the current account deficit likely will begin widening again and U.S. external debt will rise steadily.

However, just because the current account is unsustainable in the long term does not mean that a correction is imminent. Theory provides no guidance as to how large the external debt must become before developments are triggered that would narrow the U.S. current account deficit. Our baseline projection suggests that the U.S. net external debt will grow from around 20 percent of GDP at present to around 60 percent of GDP by 2020. Is that a lot or a little? To answer this question, we look to the current pattern of external liabilities among industrial countries, and we find a number of countries whose external debt ratios currently are 60 percent or higher.

The net debt/GDP ratio, while a common and useful summary measure of an economy's international balance-sheet situation, is not a perfect or unique indicator of a country's creditworthiness. Accordingly, in Section IV, we consider a second metric of current account sustainability: the exposure of investors to U.S. assets in terms of the share of U.S. securities in foreign portfolios. If the financing of the current account deficit means that this exposure is rising without limit, that, too, would suggest that the current account is unsustainable. We find no evidence that, to date, the exposure of foreign investors to U.S. assets has been rising. Calculations based on our projections of the U.S. balance of payments (described above) suggest that this exposure will increase going forward, but not necessarily to a worrisome extent.

All told, the evidence we present in Sections III and IV suggests that, even in the absence of further changes in the driving variables, it would likely be many years before indicators of the U.S. international balance sheet breached any significant thresholds of creditworthiness and investor exposure. Yet, if such thresholds were breached, do we know how rapidly forces would be set in motion to narrow the current account deficit and restrain the growth of external debt? To address this question, Section V examines the extent to which, historically, higher levels of external debt or related imbalances have led to changes in an economy's access to financing. We first examine the effect of external debt on two variables that closely reflect the behavior of global investors: interest rates and exchange rates. Estimating panel regressions for a sample of industrial countries, we find that higher levels of debt push up interest rates in a country by only a very small extent, and exert no discernable effect on exchange rates. We then reproduce recent results by Gruber and Kamin (2008), who find that in panel regressions to explain the current account balance, the lagged value of the net international investment position (NIIP) invariably has a positive and significant coefficient; this suggests that higher levels of debt lead to larger, not smaller, current account deficits. Section VI summarizes our findings and advances some tentative conclusions.


II  Assessing Current Account Sustainability

II.1   The NIIP/GDP criterion

The net international investment position (NIIP) represents the sum of all claims by U.S. residents on foreign residents less the claims of foreigners on the United States. The NIIP is a key determinant (along with rates of return) of U.S. net investment income: the sum of receipts on foreign assets owned by U.S residents net of payments on foreign claims on U.S. residents. Therefore, most analysts underscore that a necessary condition for current account sustainability is that the NIIP/GDP ratio be stable (Mann, 1999, 2002, 2003, Mussa, 2004, Cline, 2005, Edwards, 2005). Otherwise, if the (negative) NIIP/GDP ratio were to rise without limit, the ratio of net investment payments to GDP would rise as well, and would eventually exceed GDP.

Unrestrained increases in the (negative) NIIP/GDP ratio beyond some threshold should set in train a number of developments that would narrow the current account deficit and restrain the growth of external debt: U.S. residents would reduce their spending as their wealth declined and they experienced an erosion of the amount of disposable income remaining after servicing their debt. And foreigners would sell off U.S. assets as they became concerned about our ability to repay debts, weakening the dollar and thus again leading to smaller deficits.

The stability of the NIIP/GDP ratio required for current account sustainability, in turn, imposes limits on the current account deficit. To see this, note that for the ratio of the NIIP to GDP to remain stable over time, the proportionate change in the NIIP must equal the proportionate rise in nominal GDP:

(NIIP$ _{t}$ - NIIP$ _{t-1})$/NIIP$ _{t-1}$ = (GDP$ _{t}$ - GDP$ _{t-1} )$/GDP$ _{t-1}$

Leaving aside any valuation adjustments, the annual change in the NIIP is equal to the current account balance:

NIIP$ _{t}$ - NIIP$ _{t-1}$ = Current Account$ _{t}$

Therefore the proportionate change in the NIIP is equal to the ratio of the current account to the lagged NIIP; this, in turn, approximately equals the current account/GDP ratio divided by the NIIP/GDP ratio:

(NIIP$ _{t}$ - NIIP$ _{t-1})$/NIIP$ _{t-1}$ = (Current Account$ _{t }$ /NIIP$ _{t-1})$

                                          ≈ (Current Account$ _{t }$/GDP$ _{t})$/(NIIP$ _{t}$/GDP$ _{t})$

Accordingly, for the ratio of the NIIP to GDP to remain stable over time, the current account/GDP ratio divided by the NIIP/GDP ratio must equal the proportionate rise in nominal GDP:

(Current Account$ _{t }$/GDP$ _{t})$/(NIIP$ _{t}$/GDP$ _{t})$ . (GDP$ _{t}$ - GDP$ _{t-1})$/GDP$ _{t}$

In 2007, the current account deficit was about 5 percent of GDP and the NIIP was about -18 percent of GDP. This implies, all else held constant, that the NIIP would rise (become more negative) at a pace of 28 percent annually, much faster than the prospective rate of increase of nominal GDP of 4.4 percent (see Section III). Were the current account deficit to remain at 5 percent of GDP, the NIIP/GDP ratio would stabilize once it reached -114 percent.3 This is because at that level of the NIIP, the proportionate rise in the NIIP-5 percent/114 percent-is equal to the prospective 4.4 percent rise in nominal GDP. How large a negative NIIP/GDP ratio is sustainable? Nobody knows, but some relevant considerations are discussed in Section III.4.

II.2  Qualifications to the NIIP as a measure of external sustainability

The NIIP does not fully summarize the sustainability of the external position. As will be discussed further below, depending upon the rate of return, the same NIIP may be associated with very different net investment income flows. Several additional considerations also affect the interpretation of the NIIP as a measure of creditworthiness and sustainability.

First, changes in the valuation of assets may affect the NIIP without affecting the economy's underlying capacity to service the external position. For example, all else equal, a rise in U.S. stock prices will raise the value of foreign holdings of U.S. assets and thus cause the NIIP to become more negative. However, this does not necessarily mean that the U.S. external position has become more difficult to finance. On the contrary, the higher stock prices may reflect increases in U.S. income and productivity, raising our capacity to make foreign payments; moreover, higher stock prices mean we can finance the same current account deficit through the sale of fewer (but pricier) equities to foreigners.

An extreme example of the impact of equity valuations on the NIIP is Finland, where a substantial share of its external liabilities consists of foreign holdings of stock in Nokia. As shown in the top panel of Exhibit 1, the surge in the NIIP to nearly -170 percent of GDP in 1999 was driven by a parallel surge in the price of Nokia stock, and when that stock declined, so, too, did the size of Finland's negative NIIP.

Second, and as a related point, one should not confuse the NIIP with the net wealth of an economy's residents. Net wealth is comprised of total assets owned by residents, both domestic and foreign, less foreigners' claims on those residents. The bottom panel of Exhibit 1 compares the net wealth of U.S. residents to the NIIP (expressed as a liability position) and total gross claims on U.S. residents, including foreign direct investment in the United States. (It is important to note that in this measure of net wealth the foreign claims, or net liabilities, have already been netted out.) As the chart illustrates, relative to net wealth both the U.S. net debt position and the gross claims of foreigners remain relatively small.4 Presumably, a country's ability to repay external debt will depend not only on its GDP, but also on its total wealth, just as a homeowner's ability to repay his mortgage depends not just on his income, but on the value of his assets including, but not limited to, his house. Accordingly, increases in net external debt accompanied by even larger increases in the value of domestic assets should not lead to correction of the current account deficit: there should not be declines in creditworthiness leading to a pullback for global investors, nor should the rising debt lead to spending restraint by U.S. residents as long as total wealth is rising.$ ^{ }$

Finally, the aggregate NIIP may be only loosely related to the credit risk that foreign investors face. In principle, the creditworthiness of a borrower is determined by, among other things, the total debt the borrower has issued. For most international borrowers in an industrial economy, however, foreigners represent only a small portion of their creditor base, with most liabilities being to domestic residents. Therefore, the fact that foreign claims on the United States are rising does not necessarily mean that U.S. indebtedness is rising relative to its ability to repay. The diversity and distribution of creditworthiness across borrowers in a given economy is likely to influence the credit risks faced by foreign investors to a greater degree than the overall foreign indebtedness of the economy. (As discussed in more detail in Section III.5, the riskiness of U.S. external debt is reduced by the fact that the major debtor is the U.S. government.) This is reinforced by the fact that in most industrial countries, it is not possible to treat foreign creditors differently from domestic creditors.


III  Simulations of the U.S. balance of payments

With these qualifications in mind, we now consider projections of the U.S. balance of payments to determine whether the key criterion for current account sustainability - the stability of the NIIP/GDP ratio - is likely to be met. For this exercise, we use the Federal Reserve Board's partial-equilibrium model of the balance of payments, which is described briefly below. (A more complete description is provided at the end of this paper.)

Before proceeding, we address the desirability of using a partial equilibrium model--which assumes the key macroeconomic drivers of the current account to be exogenous--to assess current account sustainability. In principle, the new generation of forward-looking dynamic general equilibrium models might be better suited for longer run macroeconomic projections. However, in these models, trade deficits and external debt represent equilibrium responses to shocks, and asset prices and deficits start to correct long before economies reach any putative debt limits. (See, for example, Erceg, Guerrieri, and Gust, 2006) Conversely, much of the debate over U.S. external sustainability assumes that U.S. indebtedness may expand until it reaches certain limits, after which correction may be triggered. In this context, it makes sense to use a partial equilibrium model, which does not assume spending adjusts endogenously in response to future financing constraints, to forecast the paths of external imbalances and debt under plausible assumptions about output growth and prices, and then to assess whether those paths are sustainable. Moreover, the USIT partial-equilibrium model described below treats the U.S. balance of payments in considerably more detail than any general equilibrium model currently in use, and such detail is essential to assessing current account sustainability.

III.1  The USIT model

The USIT (U.S. International Transactions) model consists of 491 equations including 26 econometrically estimated behavioral equations, with the rest being identities and other computational equations. The model takes as exogenous projections for the central determinants of the U.S. external accounts, including: U.S. and foreign real GDP growth, U.S. and foreign inflation rates, U.S. interest rates, oil prices, and the foreign exchange value of the dollar. Based on these inputs, it then projects U.S. external balance variables in four broad categories: (1) trade flows, (2) non-trade components of the current account (especially investment income), (3) financing flows, and (4) the investment positions comprising the NIIP. Salient aspects of the modeling strategy and parameters are as follows:

(1) Trade sector

(2) Non-trade components of the current account balance

(3) Financing Flows

(4) Investment positions

III.2  Key assumptions for the projection

The most important assumptions underlying the baseline balance-of-payments projection are shown on the first page of exhibit 2.

III.3  Model projections

III.3.1  The baseline projection

As indicated in the second page of Exhibit 2, after some initial wiggles, real exports grow at a pace of nearly 5 percent over most of the projection period. Real imports, reflecting their higher elasticity with respect to GDP, grow a touch faster than 5 percent. In consequence, the trade balance widens gradually as a share of GDP, reaching about 5½ percent by 2020. The non-oil trade deficit expands at a faster pace, as the volume of oil imports rises more slowly than other types of imports, consistent with trend declines in the oil-intensity of U.S. GDP.9 The current account balance also declines gradually as a share of GDP, reflecting not only the widening trade deficit, but also a (long-expected) shift in the balance on investment income from positive to negative as the NIIP gets more negative; net investment income and the current account deficit would deteriorate even faster were it not for the asymmetry in the rates of return on foreign direct investment. Finally, reflecting all of these developments, the NIIP/GDP ratio deteriorates steadily over the projection period, reaching over -60 percent of GDP by 2020.

Because of their importance for net investment income and thus the current account balance, the third page of Exhibit 2 provides more detail on the composition of projected gross investment positions and on the rates of return on these positions. The bottom panel indicates that the high rates of return on direct investment claims that we are assuming is well in line with past history, while the rate of return on direct investment liabilities is, if anything, generous by historical standards. The similarity in our projection of rates of return on portfolio claims and liabilities is also supported by history. The top panel shows that increases in U.S. direct investment claims, which have the potential to significantly improve the net investment income balance owing to their high rate of return, do not appear out of line with the evolution of other categories.

We draw four central conclusions from this projection. First, based on the standard criterion - stability of the NIIP/GDP ratio - the U.S. current account balance is not sustainable in the long term. The NIIP/GDP ratio deteriorates by more than 40 percentage points of GDP by 2020, or very roughly 4 percentage points per year. But, second, even if the current account is unsustainable, it is probably less unsustainable than would have been the case had we started the projection back in, say, 2000; at that time, as indicated in the first page of Exhibit 2, the real value of the dollar was considerably higher, and U.S. and foreign growth seemed more similar. Moreover, and third, it is doubtful that, by 2020, the U.S. balance of payments will be entering any "danger zone" where external adjustment will be urgently required. Although the level of the net debt appears quite elevated (this will be discussed further below), net investment income payments still represent a paltry ½ percentage point of GDP. This debt burden implies only a minimal drag on spending, nor would it wave a red flag to investors concerned about the creditworthiness of the U.S. economy. Fourth and finally, even if investors took more signal from the NIIP/GDP ratio than from the net investment income balance, it would take quite a few years before the net debt rose above 60 percent of GDP.

As in all forecasts, our projections depend crucially on the extrapolation of past relationships and parameters into the future. We would note that two of our most important such extrapolations have opposite effects on the outlook. On the one hand, our assumption that the Houthakker-Magee asymmetry in income elasticities will persist leads to forecasts of larger current account deficits and net debt than if we assumed this asymmetry to erode.10 On the other, our projection that the return on U.S. direct investment abroad will continue to exceed that on foreign direct investment in the United States leads to smaller deficits and debt than if the gap in rates of return were to start closing. All told, we are comfortable that these risks to our forecast offset each other to a reasonable extent, but we acknowledge that the outlook is quite uncertain.

III.3.2  Comparison with other projections

Compared with some previous exercises in projecting the U.S. balance of payments, our baseline projection pushes considerably farther into the future the date at which the U.S. external debt becomes a concern. For example, writing nearly a decade ago, Mann (1999) projected that with an unchanged exchange rate and standard growth assumptions, the U.S. current account deficit would reach 8 percent of GDP by 2010 and the NIIP/GDP ratio would reach -64 percent of GDP. With updated assumptions, Mann (2004) projected the current account deficit would reach roughly 13 percent of GDP by 2010. Cline (2005) projected that by 2010, the current account deficit would reach 7¼ percent of GDP and the NIIP/GDP ratio would reach 50 percent. Comparing model simulations is difficult, but several factors likely contribute to the more benign outlook in our projections compared with Mann (1999, 2004) and Cline (2005): the dollar has fallen further from the levels assumed in their projections; a combination of valuation changes and data revisions have boosted the starting point for our projections of net investment income; and valuation changes and data revisions have boosted the starting point for our projections of the NIIP.

Two other projections might be mentioned, although they are more difficult to compare with ours. Higgins, Klitgaard, and Tille (2005) construct a scenario in which the NIIP/GDP reaches -65 percent of GDP in 2015 and -89 percent of GDP by 2025; this represents faster deterioration than in our projections, but it is based on the assumption that the current account deficit is fixed at 6 percent of GDP, a higher deficit than we project for most of the projection period. By contrast, Kitchen (2007) develops a projection in which the NIIP/GDP ratio reaches only -39 percent of GDP by 2015--compared with about -50 percent of GDP in our baseline--but this projection assumes dollar depreciation of over 1 percent annually. Notably, Kitchen's analysis, like ours, assumes a persistent rate of return differential favoring U.S. direct investment abroad, and thus he also projects a very small deficit on net investment income, notwithstanding a still-substantial net external debt.

III.3.3  Alternative projections

We believe the baseline projection described above to be plausible, but certainly the confidence interval around future projections must be very large indeed. Accordingly, in this section we present several alternative projections to illustrate the range of uncertainty, shown in Exhibit 3.

In the first alternative projection, the rate of foreign GDP growth is increased by about ½ percentage point, so that it grows about 4 percent annually. As shown by the magenta lines, the trade and current account deficits flatten out and then start narrowing; the net investment income balance is much improved, as higher foreign growth leads to more high-earning U.S. direct investment abroad; and the NIIP/GDP ratio deteriorates more slowly. Hence, with this relatively small alternation of assumptions, the present configuration of asset prices, growth rates, and exchange rates would likely be sustainable in the long term.

In the second alternative projection, the rate of foreign GDP growth is lowered by about ½ percentage point and U.S. GDP growth is boosted about ½ percentage point, so that they both grow at about 3 percent annually. As denoted by the green lines, under this scenario, the current account deficit widens to more than 8 percent of GDP by 2020, the NIIP/GDP ratio deteriorates beyond -70 percent, while the balance on net investment income now declines to about -1 percent of GDP. These outcomes are less sustainable than those in the baseline projection, but nevertheless, the debt-service ratio remains benign.

In the third alternative projection, shown by the red lines, oil prices rise at 5 percent annually. In this scenario, the trade deficit widens to nearly 8 percent and the NIIP/GDP ratio also deteriorates beyond 70 percent of GDP by 2020. But surprisingly, the balance on net investment income is nearly zero, much better than in the baseline. Higher oil prices boost the profits of U.S.-based oil companies, leading to higher receipts on direct investment abroad. All told, therefore, the higher oil prices have mixed implications for sustainability.

Finally, we consider a scenario--the blue lines--in which the dollar declines by 1 percent annually going forward and, as investors demand a higher return to compensate, U.S. interest rates rise by 1 percentage point as well. In this scenario, which might be regarded as quite gradual correction, the trade deficit is considerably reduced relative to baseline. This positive effect on external balance is partly offset by the higher payments required on U.S. portfolio liabilities, so that the net investment income deficit is larger than in the baseline. However, on balance the current account deficit is narrower than in the baseline projection and the NIIP/GDP ratio slightly less negative as well.

To sum up, the risks to our projection are both on the upside and the downside, and we believe the baseline represents a plausible modal scenario.

III.3.4  Ex post historical simulation

Obviously, beyond uncertainty about the exogenous variables in our simulations, another source of error in our projections is parameter uncertainty. To at least partially address this concern, Exhibit 4 presents the results of a simulation of the model starting in the fourth quarter of 1994 and ending in the fourth quarter of 2007. The exogenous variables are set to their actual historical values--denoted by the black lines--while the endogenous variables are simulated dynamically and shown in red.

The model does a surprisingly good job of tracking movements in the trade and current account balances. Simulated rates of return on direct and portfolio investment track history less well, but still follow the broad contours of the historical data, as does the predicted path of net investment income. The predicted ratio of the NIIP to GDP generally follows the actual path until 2003 or so, after which the predicted path continues to deteriorate while the actual NIIP/GDP ratio becomes less negative. However, much of the rise (to less negative values) of the actual NIIP/GDP ratio reflected revisions to the data which uncovered more U.S. assets abroad, and this could not be anticipated by the model.

All told, the ex post historical simulation provides some comfort that our model can give us useful insights into the outlook for the U.S. external balance.

III.4  How negative a NIIP is worrisome?

Theory tells us that a sustainable current account requires a stable NIIP/GDP ratio, and, accordingly, our baseline projection suggests that the U.S. current account is not sustainable in the long run. However, theory provides no guidance as to how large the negative NIIP/GDP ratio, or the ratio of net investment income payments to GDP, could become before triggering an adjustment that narrows the current account deficit. Accordingly, it is not clear whether the roughly -60 percent of GDP that the NIIP reaches in the baseline scenario is worrisome, or whether the current account deficit would be forced to adjust much before or much after it reached that point.

To address this question, we look at the experience of other industrial countries. The top panel of Exhibit 5 presents NIIP/GDP ratios for 19 industrial economies in 2006, the latest year for which these data are available for a broad array of countries. The exhibit makes clear that the current level of the NIIP/GDP ratio for the United States, about 20 percent, is well within normal bounds. More importantly, about five countries had negative NIIP/GDP ratios in the neighborhood of 60 percent or higher: New Zealand, Greece, Portugal, Australia, and Spain. Note that in baseline scenario on Exhibit 2, the U.S. NIIP does not reach 60 percent until 2019.

The bottom panel of Exhibit 5 presents data on the ratio of net investment income to GDP for a similar group of industrial economies. A couple of countries - Ireland and New Zealand - have negative net investment income balances of 5 percent of GDP or more, while several more have balances in the -1½ to -2½ percent range. Under the baseline scenario, the U.S. net investment income balance does not reach -½ percent of GDP until 2019.

In considering sustainability, the NIIP and net investment income are compared to GDP because GDP is a measure of a country's ability to service its debt. Exhibit 5a re-computes the data shown in Exhibit 5, presenting ratios of the NIIP and net investment income to an alternative measure of debt-repayment capacity, exports of goods and services. Because of the United States' relatively low share of exports in GDP, the country's negative NIIP/exports ratio in 2006 becomes somewhat larger relative to other countries, but remains smaller than that of the five countries (listed above) with negative NIIP/GDP ratios exceeding 60 percent. According to the baseline projection described above, the U.S. NIIP/exports ratio expands to -440 percent by 2020. This is a little larger than the 2006 debt/export ratios for the most highly indebted countries shown in Exhibit 5a. However, in the baseline projection, the U.S. negative net investment income balance as a share of exports remains smaller than 5 percent, which is considerably below many of the ratios shown on Exhibit 5a. Moreover, given that a country can reduce imports or expand exports as needed to repay external debt, we feel the NIIP/GDP and net investment income/GDP ratios shown in Exhibit 5 are probably better proxies for debt-repayment capacity.

Returning to those measures, Exhibit 6 plots the net investment income balances against net international investment positions. The scatterplot makes clear that, for the most part, economies with larger (more positive) NIIPs enjoy larger (more positive) net investment income balances. Because rates of return differ across countries, and across assets and liabilities as well, the linkage between NIIPs and net investment income balances is not perfect. This limited correlation is demonstrated most clearly by Ireland: Although its NIIP/GDP ratio is not unusually negative, its sizable direct investment liabilities pay a higher return than the debt instruments which constitute most of its assets. In consequence, it has an unusually large net investment income deficit.11

To get some sense of the limits of U.S. external indebtedness, a more relevant set of comparisons may involve international investment positions of economies at the time that they begin to experience current account adjustment. The top panel of Exhibit 7 presents the NIIP/GDP ratio at the onset of current account adjustment; the adjustment years are the same ones identified in research by Croke, Kamin, and Leduc (2006), and data are available for 15 of the 23 episodes identified. The chart makes clear that there is a very wide range of NIIP/GDP ratios associated with current account adjustment - in fact, a few countries even had positive NIIPs. Therefore, it is likely that many adjustments were triggered well before NIIPs reached some notional limit, and for reasons other than the NIIP per se. Even so, in three of the 15 episodes shown the NIIP/GDP ratios rose above 40 percent before adjustment occurred, roughly double the current U.S. level.

The bottom panel of Exhibit 7 presents analogous data on the ratio of net investment income to GDP during current account adjustment episodes. Again, a considerable dispersion of net investment balances is apparent. Moreover, in 9 of the 22 episodes, the negative net investment income ratio exceeded 3 percent, a level that, in our baseline projection, the United States does not come close to reaching in the next 12 years.

The possible limits to the NIIP and the net investment position thus appear to depend on country-specific factors. Exhibit 7a plots again the NIIP/GDP ratio and the investment income to GDP ratio at the year of current account adjustment (the solid bars) as well as the averages of these measures for these countries in years prior to adjustment (the shaded bars). This analysis indicates that for many countries, current account adjustment occurred when these ratios reached levels that were notably more negative than over their previous history. However, it is also clear from the lower panel that many countries had a history of net investment income payments averaging 2 percent or more of GDP without current account adjustment. In Section V, we will revisit the question of whether, historically, higher levels of net debt have been associated with higher likelihoods of subsequent external adjustment.

III.5  Is the United States special?

In this section, we showed that the U.S. current account balance remains unsustainable, in the sense that given plausible future paths for GDP growth, interest rates, and oil prices, as well as an unchanged path of the exchange rate, the NIIP/GDP ratio will likely become increasingly negative. However, a comparison with the experiences of other industrial countries suggests that, even as far away as 2020, the U.S. net external debt will still be no larger than it is today for five industrial economies, and the servicing burden on that debt will be relatively minor. These considerations suggest that no adjustment will be required in the near term, at least as a consequence of international balance sheet considerations.

But how relevant is the experience of other industrial economies for the United States? In fact, some arguments suggest that measures of external indebtedness could become even greater for the United States than for other industrial economies before adjustment was needed. An increasingly prevalent view holds that because the United States offers especially broad, deep, and liquid financial markets, along with strong investor protects, global investors find U.S. assets unusually attractive, accept lower rates of return on U.S. assets than those of other countries, and would be willing to finance the deficit for a long period (Clarida, 2005, Cooper, 2005, Hubbard, 2005, 2006, Gourinchas and Rey, 2007, Forbes, 2008). However, Curcuru, Dvorak, and Warnock (2008) cast doubt on the view that U.S. rates of return on its portfolio liabilities are significantly below those on its assets, and Gruber and Kamin (2008) also present evidence undermining the view that U.S. assets are special.

But even if U.S. assets in aggregate hold no special attraction for global investors, above and beyond their standard return and risk characteristics, a second consideration suggests that the U.S. may be able to expand its debt to an unusual extent. Among the different categories of U.S. debtors, a key international borrower is, of course, the federal government. At the end of 2007, foreign holdings of U.S. Treasuries and agency debt amount to about $3.8 trillion, accounting for 22 percent of total U.S. foreign liabilities.12 Given the U.S. government's commitment to the quality of its debt and its access to effective taxation, this likely makes U.S. external debt, overall, more creditworthy than if it had been issued primarily by U.S. households. Equity and direct investment holdings made up an additional 29 percent of U.S. foreign liabilities. Such instruments involve no credit risk, and their valuation depends far more on the profitability of the U.S. capital stock than the extent to which that stock is owned by foreigners.

The composition of U.S. assets and liabilities may also help boost the sustainable size of the United States' net debt. As is often remarked, because the United States' foreign-currency denominated assets well exceed its foreign-currency denominated liabilities, a decline in the dollar tends to reduce the net debt. This makes U.S. debt-servicing less vulnerable to dollar depreciation, and hence probably raises the level of sustainable debt.

A number of other considerations, however, suggest that the United States may have a diminished scope to issue external debt compared with other countries. First, some of the highly indebted economies shown in Exhibit 5 may themselves represent special cases: Given their abundant resources, it may be sensible for Australia and New Zealand to import substantial capital and repay slowly over a long time horizon. Similarly, the large deficits and debts of Portugal, Spain, and Greece may be an artifact of their integration into EU and the euro area.

Second, put simply, the United States is the largest economy in the world, and heavy issuance of liabilities could saturate global demand. This consideration is addressed in Section IV below.


IV  Measures of Investor Exposure to U.S. Assets

The NIIP/GDP ratio is primarily a signal, albeit a highly imperfect one, of the weight of an economy's debt service obligations; when the NIIP/GDP ratio reaches a certain size, investors may decide to limit their acquisition of the economy's assets, fearing that larger NIIPs may not be serviceable. In addition to concerns about creditworthiness, however, investors may also seek to limit their exposure to an economy because that exposure threatens to breach a certain share of their portfolio.13 The NIIP/GDP ratio is not a very useful measure of this type of exposure, that is, of the weight of U.S. assets in foreign portfolios. In this section, we address several more direct measures of the exposure of investors to U.S. assets.

IV.1  Recent measures of foreigners' exposure to U.S. assets

Exhibit 8 plots the share of U.S. equities and bonds in the global market capitalization of those instruments. This measure draws no distinction between U.S. and foreign investors, and merely gauges whether persistent U.S. current account deficits have been associated with more rapid issuance of equity and bond liabilities than is occurring in other economies. In fact, the data show little net rise since the late 1990s in the U.S. share of global market capitalization for these instruments, likely reflecting two factors. First, financial deepening is progressing rapidly abroad, and increased securities issuance has led to ratios of market capitalization to GDP abroad that approach those of the United States.14 Second, declines in stock prices, on balance, since 2000 and declines in the dollar since 2002 have also kept exposures to U.S. assets in terms of the shares held in check.

An alternative approach to gauging the exposure of investors to U.S. assets is to measure the share of U.S. assets in foreign portfolios. Exhibit 9 compares, for the limited number of countries and years for which survey data are available, the change over time in (1) the aggregate share of holdings of U.S. equities and bonds in overall holdings by foreigners of these instruments (the blue bars), and (2) the aggregate share of overall holdings by foreigners of these instruments comprised of claims on residents outside their own countries (the red bars).15Note that overall holdings include not only a country's cross-border holdings of equities or bonds, but also its holdings of its own domestic equities or bonds. A number of observations can be made. First, the share of U.S. equities and bonds in the aggregate portfolios of foreigners has not risen much since 1997, and most or all of that increase took place between 1997 and 2001.16 Second, compared to the share of U.S. assets in portfolios abroad, the share of all external (to them) assets in portfolios abroad has risen by as much or more. This relationship may be seen more easily in Exhibit 10, which indicates the share of U.S. equities and bonds in the external portfolios of foreigners. (In these calculations, holdings of a given country's domestic securities are subtracted from its overall holdings to arrive at its external holdings.) The shares of both U.S. equities and bonds in these portfolios rose between 1997 and 2001, but have declined or been little changed since 2001.

Exhibit 11 assesses the extent to which foreigners are "underweight" in U.S. assets, and compares that to the extent that they are underweight in external assets more generally.17 Foreigners are considered to be appropriately weighted (in terms of a standard portfolio allocation model) in U.S. equities, for example, if the share of U.S. equities in their total equity portfolio - the blue bars in Exhibit 9 - is equal to the share of U.S. equities outstanding in global equity capitalizationBas shown in Exhibit 8. We thus compute foreigners' relative portfolio weights in U.S. assets (plotted against the vertical axis) by dividing the share of U.S. securities in the total portfolio of foreigners by the size of the U.S. market relative to the world market:

   Share in US securities$\displaystyle \,\,=\,\,\,\frac{\mbox{foreign holdings of US securities}\,}{\mbox{foreign holdings of all securities}} $
   Weight$\displaystyle \,$in$\displaystyle \,$US$\displaystyle \,$securities$\displaystyle \,\,=\,\,\frac {\mbox{Share}\,\mbox{in}\,\mbox{US}\,\mbox{securities}}{\frac {\mbox{US}\,\mbox{Market}\,\mbox{Cap}} {\mbox{Global}\,\mbox{Market}\,\mbox{Cap}}} $

A relative portfolio weight of 1 implies appropriate weighting of U.S. assets in foreigners' portfolios, while a relative weight less than 1 implies an underweighting of U.S. assets.

A similar calculation is undertaken for the foreigners' relative portfolio weight in all external securities, where for any given country outside the United States, "external" refers to all countries external to that country (including the United States).18 A value of this calculation (plotted against the horizontal axis) less than 1 implies that foreigners are underweight in assets outside their own country and overweight in domestic securitiesBthat is, they exhibit home bias.

Observations on the dashed 45-degree line would indicate that foreigners are equally underweight U.S. and other external assets. The data indicate that foreign investors are both underweight in U.S. assets and in external assets more generally - that is, they exhibit home bias. In 1997, the bias against U.S. assets appeared to be considerably greater than the bias against other countries' assets. Since then, foreigners appear to have reduced their bias against U.S. and other countries' equities about equally. The same appears true for foreign holdings of U.S. and other external bonds between 2001 and 2006; between 1997 and 2001, they appear to have reduced their bias against U.S. bonds by somewhat more. Although foreigners' home bias has declined over this period, foreigners remain more underweight in U.S. securities than they do in external securities in general.

The bottom line from Exhibits 8 - 11 is that, in spite of the expansion of U.S. external liabilities since the mid-1990s, neither the shares nor the relative weights of U.S. assets in foreigners' portfolios have increased to any meaningful extent. This somewhat surprising result is, in part, a reflection of the decline in the dollar since 2002, which has reduced the value of holdings of dollar-denominated instruments relative to those denominated in other currencies. However, this result also reflects the increases of asset holdings abroad more generally, of which increased holdings of U.S. assets are just a part. All told, there is no evidence that an overhang of excessive foreign exposure to U.S. assets is developing which would require further adjustments in the U.S. current account balance or in U.S. asset prices to correct.

IV.2  Prospective future movements in foreigners' exposure to U.S. assets

Even if the exposure of foreigners to U.S. assets, relative to a number of benchmarks, does not appear to have increased much over the past decade, it is possible that the financing of continued current account deficits would push this exposure to more worrisome levels in the future. With the projected increase in the NIIP in our baseline projection described above, foreign investors will of necessity acquire many additional U.S. assets. How large a share of their portfolio foreign investors are willing to acquire is an open question. It depends importantly on factors beyond the evolution of the U.S. NIIP, including the growth of securities issuance in foreign economies and thus the share of U.S. securities in global market capitalization.

To devise an estimate of the potential magnitude of the effects of the projected increase in the NIIP on foreign portfolios, we perform the following exercise: We assume that both U.S. and foreign total market capitalization (reflecting equities and bonds combined) grow at their respective rates of nominal GDP, thus keeping their market cap/GDP ratios constant. As described in Section III, the USIT model simulations project gross portfolio flows into and out of the United States so that the resulting net financing is sufficient to meet the balance of payments requirements while also keeping the growth in the gross positions as close as possible to their recent historical rates.19 Thus, the total portfolio of foreign investors is projected to grow along with foreign market cap (minus the amount acquired by U.S. investors), plus estimated increased holdings of U.S. securities. Finally, we perform an alternative calculation in which the projections for financial flows into and out of the United States remain the same, but both U.S. and foreign market cap grow at the same rate (equal to the average of foreign and U.S. growth), so that U.S. market cap stays constant as a share of global market cap.

As illustrated in Exhibits 12A-12D, the results of this projection exercise generally point to increases in the share and relative weight of U.S. assets in foreigners' portfolios, but it is not clear those increases would be worrisome. Panel A shows projections for total U.S. market cap as a share of global market cap. (This panel is comparable to the share concept in Exhibit 8, but combines equity and bond capitalization.) Under the baseline assumption, total U.S. market cap declines to about 32 percent of global market cap by 2020, reflecting the slower projected growth of U.S. nominal GDP and thus of U.S. market cap, compared with foreign GDP and market cap. In the alternative simulation, the U.S. share of market cap stays constant, by design.

Panel B shows that if foreigners acquire U.S. assets sufficient to accommodate the rise in the NIIP, the share of U.S. market cap held by foreigners rises from around 20 percent currently to near 40 percent in either simulation.

Panel C shows the evolution of U.S. securities as a share of the total portfolio of foreigners (comparable to the blue bars in Exhibit 9) and panel D shows the corresponding evolution of the relative portfolio weights in U.S. securities (comparable to the relative portfolio weights in U.S. securities shown in Exhibit 11). Under either simulation, the share increases to around 20 percent by 2020, and the corresponding estimated relative weight of U.S. securities in foreigners' portfolios increases to 55-60 percent.20 This increase in the relative weight is substantial, but even so, a relative weight of .55 implies that foreigners would remain underweight in U.S. assets. Moreover, although we cannot perform a similar projection of the relative weight of external securities in foreigners' portfolios, presumably that weight would also be rising substantially, assuming the trends documented in Exhibit 11 continue.21


V  How Responsive are Asset Prices to International Balance Sheet Indicators?

To make an assessment of how imminent is a correction in the current account balance, one must know the answers to three questions. First, what is the likely future evolution of the current account balance, debt service, and external debt ratios? We took a stab at answering this question with the simulations illustrated in Exhibits 2 - 4, and 12. Second, what are likely benchmarks for external debt indicators, beyond which external adjustment becomes more probably? We surveyed data on the external debt profiles of other industrial economies to make some tentative judgment as to upper range of reasonable levels of external indebtedness.

Third and finally, as external indebtedness rises, what is the probable effect of this rise on interest rates, exchange rates, and, ultimately, the current account balance? For example, once the negative NIIP/GDP ratio breaches some threshold of sustainability, how rapidly do investors pull back from a country's assets, thus boosting interest rates, pushing down the currency, and inducing current account adjustment? As an initial rough cut at answering this question, we describe below regressions of interest rates and exchange rates on measures of international balance sheet positions, as well as a range of macroeconomic control variables. We also refer to econometric estimates by Gruber and Kamin (2008) of the effect of the NIIP/GDP ratio on current account balances.

V.1  Long-term interest rates

Were increases in external debt to lead to concerns about a country's creditworthiness and to a pullback by global investors, one should observe an increase in a country's domestic interest rates. To examine this possibility, we estimate panel regressions using annual data for 22 industrial countries over the period 1975 to 2006.22 The dependent variable is the nominal long-term (usually 10-year) yield on government benchmark bonds. A set of control variables includes the overnight money market interest rate, the four-quarter rate of CPI inflation, the four-quarter rate of real GDP growth, the standard deviation of the quarterly change in the long-term nominal interest rate over the preceding 12 quarters, the ratio of the structural (full-employment) fiscal balance to GDP, and two annual lags of the dependent variable.

The first column of Table 1 presents the results of this equation, estimated including only the control variables. The results are, for the most part, consistent with expectations. Increases in money market interest rates, inflation, and real GDP growth all boost nominal long-term bond yields by a statistically significant extent. Also as one would expect, increases in the volatility of interest rates boost yields and increases in the fiscal balance reduce yields, although these effects are not statistically significant.

The next column of the table adds year and country fixed effects, as well as a dummy variable that becomes one in 1999, with the creation of the euro area. The coefficients on the control variables are, for the most part, little changed.

The next four columns add, separately, to this equation four different measures of external balance, all lagged one year: the NIIP/GDP ratio, the ratio of net investment income (NIINCOME) to GDP, the current account (CAB)/GDP ratio, and the share of a countries' gross external liabilities in the gross external assets of foreigners (Ext. Liab.). The remaining columns present results of equations that include all four of these external balance measures together, but with different combinations of year and country fixed effects.

By and large, there is little evidence that the external balance measures examined here are associated with a significant effect on long-term yields. To the extent that any of these variables has a consistent and nearly significant effect of the expected sign, it is the NIIP/GDP ratio. At its largest, the coefficient on this term is -.005, implying that a 100 percent of GDP negative NIIP would be associated with an increase in the long-term nominal interest rate of 50 basis pointsBthis is a discernable, but not especially large, increment. The current U.S. NIIP of about -20 percent of GDP implies a boost to the interest rate of a fifth of that, of only 10 basis points. (This is a much smaller effect than estimated by Lane and Milesi-Ferretti, 2001, using a more limited set of control variables.)

In interpreting the coefficients on the external balance variables, a prominent identification problem should be acknowledged. In principle, countries with highly developed financial systems and strong investor protections should attract foreign investors. As noted earlier, a number of analysts suggest that the particular attractiveness of U.S. assets helps to explain the large U.S. current account deficits. (See, among others, Blanchard, Giavazzi, and Sa, 2005, Clarida, 2005, Cooper, 2005, Hubbard, 2005, 2006, and Forbes, 2008.) These large capital inflows, in turn, ought to lower U.S. long-term yields. Accordingly, a priori, it is not clear whether large external debts should be associated with higher interest rates, because they raise concerns among investors, or lower interest rates, because the large debts reflect strong investor interest.

However, the estimates shown in columns 2-6 and 9-10 should, to a large extent, control for the simultaneity problem described above, as they include country fixed effects. Any special attractiveness of a country's assets is likely to be persistent, to affect bond yields for extended periods, and thus to be picked up in the coefficient on the country effect. Some evidence in support of this view is provided by the fact that in columns 7 and 8, where no country fixed effects are included, the coefficient on the NIIP/GDP ratio is much smaller than in columns 9 and 10, where country fixed effects have been included. This suggests that the country fixed effects are, indeed, helping to control for the simultaneity problem.

V.2  Exchange rates

Another sign that investors are pulling back from financing a country's current account deficit is, of course, a depreciation of the exchange rate. Therefore, if higher levels of external debt and debt-service are systematically associated with a higher probability of external adjustment, they should also be associated with subsequent exchange rate depreciations. To assess whether this is, indeed, the case, we re-estimated the panel equations shown in Table 1, but substituted measures of the real exchange rate in place of nominal long-term interest rates. We use the CPI-deflated multilateral exchange rate published in the IMF's International Financial Statistics.23 (An increase indicates appreciation.)

In Table 2, the dependent variable is the percent deviation of the real exchange rate from its country-specific sample mean. The coefficient on the money market interest rate is positive and significant, while that on the inflation rate is about the same magnitude but negative and significant; together, these results confirm our expectation that increases in the real interest rate should positively affect the real exchange rate. None of the other control variables have a significant coefficient of the expected sign - this is perhaps not surprising, as exchange rate models are notoriously hard to estimate. The measured effects of the external balance variables are a mixed bag as well. The NIIP and net investment income generally have a positive effect on the real exchange rate as expected, but the effect is inconsistent in terms of sign and significance. Higher current account balances lead to lower exchange rates and larger external liabilities lead to higher exchange rates, the opposite of what we'd expect.

Finally, Table 3 re-estimates these equations, with the dependent variable specified as the percent change in the real exchange rate from the previous year. Now, the current account balance appears to be positively associated with the real exchange rate, but the coefficients on the other variables remain insignificant or of the wrong sign.24

V.3  Current account balances

Should the external debt of a country become large enough so as to raise serious concerns about its creditworthiness, ultimately developments must ensue which would lead to reduction of the current account deficit. But is there any evidence that higher levels of external debt lead to subsequent current account adjustments? Table 4 reproduces econometric results from Gruber and Kamin (2008). They estimate a panel regression, using data for a wide range of industrial and developing countries over the period 1982-2006, to explain the ratio of the current account balance of GDP. The regression estimates shown include standard determinants of current account balances drawn from the literature, and, for the most part, coefficients are as expected: larger current account balances (e.g., surpluses) are associated with higher per capita income, higher fiscal balances, lower age dependency ratios, higher net exports of oil, and, in the last two columns, higher indexes of governance. (Better governance is presumed to attract investment and thus lower the current account balance.)

Notably, the coefficient on a country's net foreign assets (i.e., the NIIP), is positive and significant.25 This is the opposite result that would obtain if more negative NIIPs led to smaller current account deficits. It may be that higher levels of net foreign asset increase the current account balance by raising net investment income, or it may be that the NIIP captures persistent elements of the current account balance that are not captured by the other explanatory variables. In any event, however, the result suggests that, at least in historical experience, it is difficult to find a systematic relationship between levels of external indebtedness and patterns of current account adjustment. Moreover, the result shown in Table 4 is not specific to the research of Gruber and Kamin (2008); Chinn and Prasad (2003) and Chinn and Ito (2007), as well as Gruber and Kamin (2007), also estimate positive coefficients on the NIIP.

Notably, Lane and Milesi-Ferretti (2002) find that although the NIIP/GDP ratio is not correlated with the trade balance, an adjusted measure that takes into account growth rates of GDP and interest rates is, indeed, correlated negatively, consistent with some stabilizing effects of the NIIP. However, Lane and Milesi-Ferretti (2001) look at the error-correction properties of the NIIP and find deviations of the NIIP from equilibrium are closed only slowly.

V.4  Summing up

In this section, we examined the extent to which, historically, deteriorations of external balance positions have been associated with pullbacks by global investors, as indicated by higher interest rates, more depreciated exchange rates, or increases in current account balances. All told, we found that greater external debt was associated with only small increases in interest rates and mixed effects on exchange rates. Of course, modeling financial market prices is notoriously difficult, so it may not be surprising that we found little evidence of strong linkages among indebtedness, interest rates and exchange rates. By the same token, however, the direst predictions that continued large U.S. current account deficits will lead to financial crisis remain unsubstantiated.

Evidence on the effect of external debt on the current account balances was also mixed, with Gruber and Kamin (2008) and other studies finding that greater net debt is associated with larger current account deficits, but Lane and Milesi-Ferretti (2001, 2002) finding evidence of some, albeit slow, stabilizing effects of the NIIP. This suggests that even if increases in net debt eventually lead to current account correction, that effect may take time to materialize.


VI  Conclusion

In this paper, we addressed three questions about the prospects for the large U.S. current account deficit. Is it sustainable in the long term? If not, how long will it take for measures of external debt and debt service to reach levels that could prompt some pullback by global investors? And if and when such levels are breached, how readily would asset prices respond and the current account start to narrow?

To address these questions, we started with projections of a detailed partial-equilibrium model of the U.S. balance of payments. Assuming plausible settings of macroeconomic indicators in the United States and abroad, as well as a flat real dollar, our projections indicate that the current account deficit will resume widening and the negative NIIP/GDP ratio will continue to expand. This suggests that the configuration of macroeconomic settings underlying the current account balance at present is not sustainable in the long term. Nevertheless, compared with earlier years when the dollar was much higher, the current account balance is likely somewhat less unsustainable at present.

Moreover, compared with other industrial economies, current levels of the U.S. debt and debt service are relatively modest, and foreign exposure to U.S. assets has been moving down rather than up. Our projections suggest that even by the year 2020, the negative NIIP/GDP ratio will be no higher than it is in five industrial economies today, and U.S. net investment income payments will remain below 1 percent of GDP. Absent changes in the dollar and consequent valuation adjustments, the share of U.S. claims in foreigners' portfolios will likely rise over the next decade, but not to an obviously worrisome extent. All told, it seems likely it would take more than a decade for U.S. indebtedness to reach any limits of global investors' willingness to extend financing.

Finally, we explored the historical responsiveness of asset prices and the current account in a wide range of industrial economies to increases in different measures of net indebtedness and external imbalances. We discerned only a very small effect of external indebtedness on interest rates, and no clear and concerted effects on exchange rates. Similarly, increases in net external indebtedness appear to have exerted no systematic effect on subsequent levels of the current account balance. Accordingly, it is not clear that, even were the U.S. net debt to approach limits to its sustainability, the developments needed to correct the current account--changes in growth rates, assets prices, exchange rates, and the like--would materialize all that rapidly.

We would emphasize that these findings do not imply that U.S. current account adjustment is necessarily many years away. Many factors could trigger such adjustment, including, inter alia, a surge in foreign growth, declines in U.S. growth, or intensified concerns about U.S. current account sustainability. In fact, judging by the developments of the last several years, we may already be in the middle of an adjustment episode. Our point is rather that international balance sheet considerations likely are not sufficient, by themselves, to require external adjustment any time soon.


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Appendix:  Key Equations in the U.S. International Transactions (USIT) Model

TRADE IN GOODS AND SERVICES

1. Core export volume: $ X_{core} /P_{Xcore} =f(Y_{f} ,(P_{Xcore} /E_{f/\$ } \cdot P_{fcpi} )_{Lag11} )$

2. Core import volume: $ M_{core} /P_{Mcore} =f(Y_{Lag1} ,(P_{Mcore} /P_{gdp} )_{Lag7} )$

3. Oil import volume:
\begin{displaymath} \begin{array}[c]{l} M_{oil} /P_{Moil} =C_{oil} +\Delta I_{oil} +X_{oil} -Q_{oil}\ C_{oil} =f(Y,(P_{oil} /P_{gdp} )_{Lag80} ,HDD,P_{ng} /P_{oil} )\ \end{array}\end{displaymath}

4. Core export price: $ P_{Xcore} =f(PD)$

5. Core import price: $ P_{Mcore} =f((P_{f} )_{Lag1} ,(E_{f/\$ } )_{Lag1} ,PC_{Lag3} )$

6. Primary commodity price: $ PC=f(Y_{world} ,(P_{cpi} /P_{fcpi} /E_{f/\$ } )_{Lag7} ,T)$

7. Services receipts: $ X_{serv} /P_{Xserv} =f(Y_{f} ,(P_{Xserv} /E_{f/\$ } \cdot P_{fcpi} )_{Lag7} )$

8. Services payments: $ M_{serv} /P_{Mserv} =f(Y,(P_{Mserv} /P_{gdp} )_{Lag3} )$

9. Services receipts price: $ P_{Xserv} =f(P_{serv} ,(P_{fcpi} /E_{f/\$ } )_{Lag1} ,P_{Moil} )$

10. Services payments price: $ P_{Mserv} =f(P_{fcpi} /E_{f/\$ } ,P_{gdp} )$

Note: exports and imports of computers and semiconductors are exogenous for both volumes and prices ( $ X_{comp}, X_{semi}, M_{comp}, M_{semi}, P_{Xcomp}, P_{Xsemi}, P_{Mcomp}, P_{Msemi})$ . Import, volume and price of natural gas are also exogenous.

11. Exports: $ X=X_{core} +X_{comp} +X_{semi} +X_{serv} $

12. Imports: $ M=M_{core} +M_{oil} +M_{comp} +M_{semi} +M_{serv} +M_{ng} $

13. Trade balance: $ TB=X-M$

INVESTMENT INCOME

14. Direct investment income receipts:
\begin{displaymath} \begin{array}[c]{l} R_{di} =f(YGAP_{f} ,P_{Moil} /P_{gdp} ,\Delta E_{f/\$ } )\ X_{di} =R_{di} \cdot(A_{di} )_{Lag1}\ \end{array}\end{displaymath}

15. Direct investment income payments:
\begin{displaymath} \begin{array}[c]{l} R_{fdi} =f(YGAP)\ M_{di} =R_{fdi} \cdot(A_{fdi} )_{Lag1}\ \end{array}\end{displaymath}

16. Portfolio investment income receipts:† \begin{displaymath}^{\dag } \begin{array}[c]{l} R_{port} =f(R_{tbill} ,R_{tbond10} ,(R_{port} )_{lag1} )\ X_{port} =R_{port} \cdot(A_{port} )_{Lag1}\ \end{array}\end{displaymath}

17. Portfolio investment income payments:† \begin{displaymath}^{\dag } \begin{array}[c]{l} R_{fport} =f(R_{tbill} ,R_{tbond10} ,(R_{fport} )_{lag1} )\ M_{port} =R_{fport} \cdot(A_{fport} )_{Lag1}\ \end{array}\end{displaymath}

18. Net investment income: $ NII=X_{di} +X_{port} -M_{di} -M_{port} $

CURRENT ACCOUNT

18. Current account balance: $ CAB=TB+NII-NT$

FINANACIAL FLOWS

19. Direct investment outflows: $ FC_{di} =f(\Delta Y_{f} ,P_{fcpi} /E_{f/\$ } ,(A_{di} )_{Lag1} )$

20. Direct investment inflows: $ FL_{di} =f(\Delta Y,P_{cpi} ,(A_{fdi} )_{Lag1} )$

21. Portfolio investment outflows:†$ ^{\dag } \quad FC_{port} =f(CAB,FAB,SD,KAB(A_{port} )_{Lag1} ,T)$

22. Portfolio investment inflows:† $ ^{\dag } \quad FL_{port} =f(CAB,FAB,SD,KAB,(A_{fport} )_{Lag1} ,T)$

23. Financial Account Balance: $ _{ }FAB=FC_{di} +FC_{port} -FL_{di} -FL_{port} +FN_{deriv} $

24. Balance of payments identity: $ -CAB=FAB+KAB+SD$

VALUATION ADJUSTMENTS (with DI at current cost)

25. On Direct Investment Claims: $ VA_{di} =f((A_{di} )_{lag1} ,\Delta E_{f/\$ } ,\Delta P_{fcpi} )$

26. On Direct Investment Liabilities: $ VA_{fdi} =f((A_{fdi} )_{lag1} ,\Delta P_{nrid} )$

INVESTMENT POSITIONS

27. Direct Investment Claims: $ A_{di} =(A_{di} )_{lag1} +FC_{di} +VA_{di} +VAO_{di} $

28. Direct Investment Liabilities: $ A_{fdi} =(A_{fdi} )_{lag1} +FL_{di} +VA_{fdi} +VAO_{fdi} $

29. Portfolio Claims:†
$ ^{\dag }_{ }A_{port} =(A_{port} )_{lag1} +FC_{port} +VA_{port} $

30. Portfolio Liabilities:†
$ ^{\dag } \quad A_{fport} =(A_{fport} )_{lag1} +FL_{port} +VA_{fport} $

31. Net International Investment Position: NIIP = Adi + Aport - Afdi - Afport

†  Private portfolio claims on foreigners and U.S. government claims on foreigners are modeled separately. For portfolio liabilities, foreign claims on the U.S. private sector are modeled separately from claims on the U.S. government.

DEFINITION OF VARIABLES

A$ _{port }$   Stock of U.S. portfolio assets abroad

A$ _{di }$   Stock of U.S. direct investment assets abroad

A$ _{fdi }$   Stock of foreign direct assets in the United States

A$ _{fport }$   Stock of foreign portfolio assets in the United States

CAB    Current account balance

C$ _{oil }$   Oil consumption

E$ _{f/\$ }$   Nominal exchange rate (foreign currency per U.S. dollar)

FC$ _{di }$   Direct investment outflows

FL$ _{di }$   Direct investment inflows

FC$ _{port }$   Portfolio claims flows

FL$ _{port }$   Portfolio liabilities flows

FN$ _{deriv }$   Net derivatives flows

NII    Net investment income

I$ _{oil }$   Inventories of oil

M    Imports of goods and services

M$ _{comp }$   Imports of computers

M$ _{core }$   Imports of core goods (non-oil goods excluding computers and semiconductors)

M$ _{di }$   Direct investment income payments

M$ _{ng }$   Imports of natural gas

M$ _{oil }$   Imports of oil

M$ _{port }$   Portfolio investment income payments

M$ _{semi }$   Imports of semiconductors

M$ _{serv }$   Imports of services

NT    Net unilateral transfers and other income paid to foreigners

PC    Non-fuel primary commodity prices

P$ _{cpi }$   CPI price index

PD    Export weighted aggregate of various domestic goods prices

P$ _{fcpi }$   Foreign CPI

P$ _{gdp }$   GDP implicit price deflator

P$ _{Mcomp }$   Import price of computers

P$ _{Mcore }$   Import price of core goods

P$ _{Moil }$   Import price of oil

P$ _{Msemi }$   Import price of semiconductors

P$ _{Mserv }$   Import price of services

P$ _{ng }$   Price of natural gas

P$ _{nrid }$   Nonresidential investment deflator

P$ _{oil }$   PPI price of oil

P$ _{serv }$   PCE price of services

P$ _{Xcomp }$   Export price of computers

P$ _{Xcore }$   Export price of core goods

P$ _{Xsemi }$   Export price of semiconductors

P$ _{Xserv }$   Export price of services

Q$ _{oil }$   Domestic oil production

R$ _{di }$   Rate of return on U.S. direct investment assets abroad

R$ _{fdi }$   Rate of return on foreign direct assets in the United States

R$ _{fport }$   Rate of return on foreign portfolio assets in the United States

R$ _{port }$   Rate of return on U.S. portfolio assets abroad

R$ _{tbill }$   U.S. 30-day T-bill interest rate

R $ _{tbond10 }$   U.S. 10 year T-bond interest rate

SD    Statistical discrepancy in the U.S. balance of payments

T    Time trend

TB    Trade balance in goods and services

TR    Index of U.S. tariff rates

VA$ _{di }$   Price and exchange rate valuation adjustment for DI claims

VA$ _{fdi }$   Price valuation adjustment for DI liabilities

VAO$ _{di }$   Other valuation adjustments for DI claims

VAO$ _{fdi }$   Other valuation adjustments for DI liabilities

VA$ _{port }$   Total valuation adjustment for portfolio claims

VA$ _{fport }$   Total valuation adjustment for portfolio liabilities

X    Exports of goods and services

X$ _{comp }$   Exports of computers

X$ _{core }$   Exports of core goods (goods excluding computers and semiconductors)

X$ _{di }$   Direct investment income receipts

X$ _{oil }$   Exports of oil

X$ _{port }$   Portfolio investment income receipts

X$ _{semi }$   Exports of semiconductors

X$ _{serv }$   Exports of services

Y    Real GDP

Y$ _{f }$   Foreign real GDP

YGAP    Output gap

YGAP$ _{f }$   Foreign output gap

Y$ _{world }$   World GDP

Exhibit 1

Data for Exhibit 1 immediately follows

*  Foreign claims and the net debt position use the market value measure of direct investment.
Sources: Flow of Funds (FRB) and Survey of Current Business (BEA).

Data for Exhibit 1:  Finland's NIIP and Nokia Price

Year
NIIP/GDP
Nokia
1991
-33.30
0.18
1992
-39.43
0.24
1993
-51.64
0.78
1994
-55.55
2.31
1995
-40.79
2.44
1996
-41.14
3.58
1997
-39.44
4.47
1998
-76.96
15.16
1999
-164.83
45.17
2000
-149.19
44.63
2001
-80.61
25.59
2002
-40.72
15.87
2003
-27.58
17.19
2004
-10.93
15.85
2005
-14.30
18.30
2006
-12.38
20.32

Data for Exhibit 1:  U.S. Net Wealth and Debt Positions

Year
Net Wealth
Gross Foreign Claim on the U.S.
Net Debt Position
1982
11737
725
-236
1983
12503
872
-257
1984
13321
993
-134
1985
14729
1206
-97
1986
16032
1494
-101
1987
16848
1708
-51
1988
18193
1998
-10
1989
19827
2397
47
1990
19976
2459
165
1991
21391
2731
261
1992
22228
2919
452
1993
23545
3236
144
1994
24313
3450
135
1995
27036
4270
306
1996
29442
5011
360
1997
33263
6202
823
1998
36734
7250
1071
1999
42187
8437
1037
2000
42048
8982
1581
2001
40824
9270
2339
2002
39284
9262
2454
2003
44609
10658
2340
2004
48936
12527
2397
2005
52355
13620
2141
2006
56670
16239
2140

Exhibit 2:  Extended Baseline Projection

Data for Exhibit 2 immediately follows

Data for Exhibit 2 below.

Data for Exhibit 2 below.

Data for Exhibit 2

Quarter
Real Exchange Rate
Foreign GDP
US GDP
Oil Import Price
US Short Term Interest Rate
US Long Term Interest Rate
Net Position
Government Payments
Private Payments
Private Receipts
Recipts
Payments
Real Exports
Real Imports
2000q1
100.000
5.810
4.080
26.080
5.520
6.480
7.040
6.110
3.960
4.020
10.490
5.800
8.240
13.630
2000q2
102.460
5.680
4.850
26.190
5.710
6.180
7.220
6.290
4.230
4.330
10.590
5.520
10.160
14.000
2000q3
103.710
5.390
3.520
28.600
6.020
5.890
7.290
6.240
4.320
4.360
9.840
4.280
10.080
13.850
2000q4
106.410
4.180
2.240
28.930
6.020
5.570
6.210
6.160
4.280
4.490
10.780
3.520
6.530
11.170
2001q1
107.400
2.740
1.860
25.150
4.820
5.050
6.080
5.870
3.970
4.070
8.910
2.130
3.420
5.950
2001q2
109.580
1.610
0.590
24.210
3.660
5.270
5.530
5.630
3.500
3.620
8.580
1.120
-2.870
-1.410
2001q3
109.170
0.430
0.350
23.510
3.170
4.980
5.140
5.170
3.250
3.260
7.760
1.880
-9.940
-7.160
2001q4
109.590
0.370
0.230
18.390
1.910
4.770
4.090
4.780
2.700
2.890
7.390
-1.580
-11.860
-7.590
2002q1
111.170
0.940
1.030
18.370
1.720
5.080
3.660
4.700
2.490
2.810
8.040
2.070
-9.520
-4.100
2002q2
109.440
1.990
1.270
24.050
1.720
5.100
3.670
4.500
2.660
2.940
8.350
3.480
-4.020
2.150
2002q3
107.490
2.970
2.220
25.530
1.640
4.260
3.200
4.280
2.610
3.040
8.590
3.770
1.640
6.420
2002q4
108.300
3.100
1.870
25.750
1.330
4.010
3.100
4.180
2.460
2.860
8.170
2.160
3.760
9.700
2003q1
106.160
2.410
1.490
30.730
1.160
3.920
2.780
3.980
2.260
2.710
8.980
4.700
1.060
5.330
2003q2
102.210
1.770
1.810
26.420
1.040
3.620
2.660
3.740
2.210
2.590
9.350
4.470
-1.860
3.320
2003q3
102.490
2.110
3.050
28.040
0.930
4.230
2.710
3.660
2.190
2.530
9.460
5.020
0.100
2.850
2003q4
99.200
3.020
3.680
27.740
0.920
4.290
2.680
3.540
2.160
2.460
10.770
5.070
5.770
4.800
2004q1
97.530
3.930
4.120
30.920
0.920
4.020
2.660
3.440
2.170
2.480
11.190
5.300
9.820
9.290
2004q2
99.800
4.550
4.130
34.550
1.080
4.600
2.810
3.520
2.210
2.510
11.110
6.720
12.050
12.090
2004q3
98.960
4.270
3.170
37.560
1.490
4.300
2.820
3.490
2.390
2.660
11.080
6.050
9.920
12.390
2004q4
95.690
3.840
3.150
40.910
2.010
4.170
3.700
3.570
2.880
2.860
10.740
6.340
7.390
11.470
2005q1
94.750
3.310
3.170
39.900
2.540
4.300
3.010
3.690
2.790
3.070
10.250
6.440
6.410
8.840
2005q2
95.960
3.320
3.010
46.280
2.860
4.160
3.370
3.780
3.000
3.170
10.440
6.400
7.140
5.260
2005q3
96.990
3.700
3.220
55.290
3.360
4.210
3.760
3.900
3.240
3.310
10.830
5.590
6.880
4.560
2005q4
98.080
3.880
2.880
55.390
3.830
4.490
4.070
4.050
3.480
3.510
11.150
7.740
7.020
5.110
2006q1
96.610
4.490
3.310
55.090
4.390
4.570
4.360
4.180
3.770
3.770
11.570
6.700
8.370
6.340
2006q2
95.420
4.540
3.220
63.810
4.700
5.070
4.590
4.390
4.030
4.010
11.890
6.860
7.430
6.370
2006q3
95.360
4.070
2.370
66.570
4.910
4.900
4.630
4.460
4.000
4.030
11.530
7.610
8.370
7.220
2006q4
93.960
3.990
2.600
55.330
4.900
4.630
4.760
4.530
3.990
3.980
11.660
6.600
9.260
3.690
2007q1
93.910
3.880
1.550
54.390
4.980
4.680
4.910
4.560
4.020
3.960
11.130
6.040
6.620
2.940
2007q2
92.030
4.000
1.890
63.840
4.740
4.850
4.510
4.650
4.100
4.090
11.760
6.930
7.070
2.000
2007q3
90.160
4.360
2.840
70.310
4.300
4.730
4.770
4.590
4.080
4.090
11.760
6.610
10.300
1.750
2007q4
87.180
4.160
2.420
80.340
3.390
4.260
5.860
4.590
3.780
3.650
11.890
6.820
8.350
1.020
2008q1
87.180
3.660
2.670
80.340
3.000
3.500
5.530
4.370
3.420
3.150
11.770
6.730
9.540
0.590
2008q2
87.180
3.010
2.120
80.340
3.000
3.500
5.550
4.200
3.160
2.820
11.590
6.650
8.500
0.700
2008q3
87.180
2.440
1.310
80.340
3.000
3.500
5.360
4.070
2.980
2.640
11.420
6.490
4.940
-0.140
2008q4
87.190
2.280
1.600
80.340
3.000
3.500
5.080
3.970
2.860
2.560
11.290
6.440
4.470
1.280
2009q1
87.190
2.490
1.820
80.340
3.200
3.950
4.860
3.980
2.850
2.600
11.230
6.440
4.380
2.340
2009q2
87.190
2.890
2.050
80.340
3.200
3.950
4.690
3.990
2.860
2.660
11.200
6.420
4.820
3.580
2009q3
87.190
3.260
2.270
80.340
3.200
3.950
4.560
3.990
2.860
2.700
11.180
6.420
5.080
3.920
2009q4
87.190
3.570
2.500
80.340
3.200
3.950
4.460
3.990
2.870
2.720
11.180
6.430
5.230
4.870
2010q1
87.200
3.800
2.660
80.340
3.400
4.400
4.460
4.060
2.950
2.820
11.210
6.410
5.910
5.930
2010q2
87.200
4.000
2.810
80.340
3.400
4.400
4.460
4.110
3.010
2.900
11.240
6.400
5.910
6.210
2010q3
87.200
4.160
2.970
80.340
3.400
4.400
4.480
4.160
3.060
2.940
11.270
6.400
5.860
6.430
2010q4
87.200
4.300
3.130
80.340
3.400
4.400
4.510
4.190
3.090
2.970
11.300
6.420
5.810
7.050
2011q1
87.210
4.110
2.940
80.340
3.400
4.400
4.540
4.220
3.110
2.980
11.290
6.370
4.860
6.460
2011q2
87.210
3.890
2.760
80.340
3.400
4.400
4.570
4.240
3.130
2.980
11.270
6.330
4.580
6.210
2011q3
87.210
3.680
2.580
80.340
3.400
4.400
4.580
4.250
3.140
2.980
11.260
6.290
4.360
6.010
2011q4
87.210
3.470
2.400
80.340
3.400
4.400
4.580
4.270
3.140
2.980
11.250
6.260
4.180
5.720
2012q1
87.210
3.460
2.400
80.340
3.400
4.400
4.570
4.280
3.150
2.980
11.240
6.230
4.190
5.620
2012q2
87.220
3.460
2.400
80.340
3.400
4.400
4.570
4.280
3.150
2.980
11.230
6.210
4.210
5.630
2012q3
87.220
3.460
2.400
80.340
3.400
4.400
4.560
4.290
3.150
2.980
11.220
6.190
4.230
5.670
2012q4
87.220
3.460
2.400
80.340
3.400
4.400
4.540
4.290
3.150
2.980
11.210
6.180
4.250
5.650
2013q1
87.220
3.460
2.400
80.340
3.400
4.400
4.520
4.300
3.150
2.980
11.200
6.160
4.270
5.640
2013q2
87.230
3.460
2.400
80.340
3.400
4.400
4.510
4.300
3.150
2.980
11.190
6.150
4.290
5.650
2013q3
87.230
3.460
2.400
80.340
3.400
4.400
4.490
4.300
3.150
2.980
11.180
6.140
4.300
5.700
2013q4
87.230
3.460
2.400
80.340
3.400
4.400
4.480
4.300
3.160
2.980
11.170
6.130
4.320
5.680
2014q1
87.230
3.460
2.400
80.340
3.400
4.400
4.460
4.310
3.160
2.980
11.160
6.120
4.330
5.670
2014q2
87.240
3.460
2.400
80.340
3.400
4.400
4.440
4.310
3.160
2.980
11.150
6.120
4.350
5.680
2014q3
87.240
3.460
2.400
80.340
3.400
4.400
4.430
4.310
3.160
2.980
11.140
6.110
4.360
5.720
2014q4
87.240
3.460
2.400
80.340
3.400
4.400
4.410
4.310
3.160
2.980
11.130
6.110
4.370
5.710
2015q1
87.240
3.460
2.400
80.340
3.400
4.400
4.390
4.310
3.160
2.980
11.120
6.100
4.390
5.690
2015q2
87.240
3.460
2.400
80.340
3.400
4.400
4.380
4.310
3.160
2.980
11.110
6.100
4.400
5.710
2015q3
87.250
3.460
2.400
80.340
3.400
4.400
4.370
4.310
3.160
2.980
11.100
6.100
4.410
5.750
2015q4
87.250
3.460
2.400
80.340
3.400
4.400
4.350
4.310
3.160
2.980
11.090
6.090
4.410
5.730
2016q1
87.250
3.460
2.400
80.340
3.400
4.400
4.340
4.310
3.160
2.980
11.080
6.090
4.420
5.720
2016q2
87.250
3.460
2.400
80.340
3.400
4.400
4.320
4.310
3.160
2.980
11.070
6.090
4.430
5.730
2016q3
87.260
3.460
2.400
80.340
3.400
4.400
4.310
4.310
3.160
2.980
11.060
6.090
4.440
5.770
2016q4
87.260
3.460
2.400
80.340
3.400
4.400
4.300
4.310
3.160
2.980
11.050
6.090
4.440
5.760
2017q1
87.260
3.460
2.400
80.340
3.400
4.400
4.280
4.310
3.160
2.980
11.040
6.080
4.450
5.740
2017q2
87.260
3.460
2.400
80.340
3.400
4.400
4.270
4.310
3.160
2.980
11.030
6.080
4.460
5.760
2017q3
87.260
3.460
2.400
80.340
3.400
4.400
4.260
4.310
3.160
2.980
11.020
6.080
4.460
5.800
2017q4
87.270
3.460
2.400
80.340
3.400
4.400
4.250
4.310
3.160
2.980
11.010
6.080
4.470
5.780
2018q1
87.270
3.460
2.400
80.340
3.400
4.400
4.240
4.310
3.160
2.980
11.000
6.080
4.470
5.770
2018q2
87.270
3.460
2.400
80.340
3.400
4.400
4.230
4.310
3.160
2.980
10.990
6.080
4.480
5.780
2018q3
87.270
3.460
2.400
80.340
3.400
4.400
4.220
4.310
3.160
2.980
10.980
6.080
4.480
5.820
2018q4
87.280
3.460
2.400
80.340
3.400
4.400
4.200
4.310
3.160
2.980
10.970
6.080
4.480
5.800
2019q1
87.280
3.460
2.400
80.340
3.400
4.400
4.190
4.310
3.160
2.980
10.960
6.080
4.490
5.790
2019q2
87.280
3.460
2.400
80.340
3.400
4.400
4.180
4.310
3.160
2.980
10.960
6.080
4.490
5.810
2019q3
87.280
3.460
2.400
80.340
3.400
4.400
4.170
4.310
3.160
2.980
10.950
6.080
4.490
5.850
2019q4
87.280
3.460
2.400
80.340
3.400
4.400
4.160
4.310
3.160
2.980
10.940
6.080
4.490
5.830
2020q1
87.290
3.460
2.400
80.340
3.400
4.400
4.150
4.310
3.160
2.980
10.930
6.080
4.500
5.810
2020q2
87.290
3.460
2.400
80.340
3.400
4.400
4.150
4.310
3.160
2.980
10.920
6.080
4.500
5.830
2020q3
87.290
3.460
2.400
80.340
3.400
4.400
4.140
4.310
3.160
2.980
10.910
6.080
4.500
5.870
2020q4
87.290
3.460
2.400
80.340
3.400
4.400
4.130
4.310
3.160
2.980
10.900
6.080
4.500
5.850

Data for Exhibit 2 (continued)

Quarter
Nominal Trade Balance
Nominal Trade Balance excluding Oil
Current Account Balance
Net International Investment Position/GDP
Net Investment Income
Direct Investment Claims
Direct Investment Liabilities
Portfolio Claims
Portfolio Liabilities
Direct Investment Claims
Direct Investment Liabilities
Portfolio Claims
Portfolio Liabilities
2000q1
-3.740
-2.520
-4.110
-8.250
0.220
14.950
11.970
48.310
57.740
10.300
5.540
3.910
4.420
2000q2
-3.700
-2.560
-4.060
-9.830
0.240
15.020
12.690
47.350
57.730
10.340
5.110
4.290
4.680
2000q3
-3.940
-2.720
-4.390
-12.050
0.180
15.170
13.490
46.730
58.670
9.710
4.010
4.320
4.730
2000q4
-4.090
-2.770
-4.450
-13.880
0.420
15.390
14.280
46.570
59.710
10.530
3.290
4.400
4.660
2001q1
-3.900
-2.650
-4.290
-15.640
0.270
15.400
14.540
47.080
61.710
8.840
2.070
3.990
4.330
2001q2
-3.520
-2.450
-3.850
-17.060
0.340
15.690
14.850
46.280
62.290
8.330
1.090
3.590
3.950
2001q3
-3.560
-2.600
-3.610
-17.790
0.110
16.360
14.860
44.710
62.040
7.440
1.880
3.290
3.700
2001q4
-3.440
-2.630
-3.450
-18.770
0.730
16.560
14.850
44.430
62.880
7.230
-1.570
2.890
3.160
2002q1
-3.630
-2.840
-4.040
-19.340
0.340
16.650
14.680
43.870
63.160
7.910
2.070
2.800
3.000
2002q2
-3.990
-2.990
-4.440
-19.060
0.170
17.220
14.380
44.270
64.140
8.000
3.520
2.880
3.080
2002q3
-4.100
-3.090
-4.410
-19.630
0.300
17.250
14.130
43.680
64.440
8.490
3.800
3.020
3.020
2002q4
-4.460
-3.310
-4.660
-19.710
0.460
17.630
14.160
44.320
65.520
7.950
2.140
2.820
2.890
2003q1
-4.660
-3.330
-5.050
-19.890
0.320
17.680
14.400
45.470
66.690
8.850
4.570
2.650
2.680
2003q2
-4.570
-3.400
-4.800
-18.810
0.440
18.190
14.200
47.370
68.260
8.990
4.480
2.540
2.580
2003q3
-4.450
-3.270
-4.710
-18.690
0.430
17.970
13.930
47.470
68.350
9.360
5.000
2.520
2.560
2003q4
-4.460
-3.280
-4.510
-19.080
0.660
18.310
14.090
48.840
70.280
10.440
4.950
2.440
2.480
2004q1
-4.770
-3.360
-4.910
-19.060
0.720
18.760
14.100
51.690
73.610
10.740
5.210
2.380
2.440
2004q2
-5.190
-3.750
-5.470
-19.840
0.510
18.900
14.200
52.750
75.450
10.830
6.560
2.450
2.510
2004q3
-5.320
-3.810
-5.370
-19.540
0.590
19.390
14.320
54.050
76.840
10.640
5.910
2.590
2.640
2004q4
-5.650
-3.840
-6.140
-19.200
0.330
20.620
14.580
55.900
79.310
9.950
6.130
2.770
3.000
2005q1
-5.480
-3.720
-6.000
-18.770
0.460
20.610
14.690
56.550
79.460
10.080
6.280
3.000
3.010
2005q2
-5.540
-3.670
-5.950
-17.830
0.430
20.680
14.470
58.320
80.610
10.270
6.410
3.070
3.170
2005q3
-5.760
-3.650
-5.520
-17.410
0.580
20.520
14.530
59.770
81.460
10.700
5.470
3.210
3.360
2005q4
-6.170
-3.840
-6.790
-17.620
0.280
19.950
14.700
60.740
82.350
11.340
7.560
3.440
3.600
2006q1
-5.850
-3.590
-6.190
-17.570
0.370
20.170
14.870
63.290
85.030
11.220
6.490
3.630
3.780
2006q2
-5.860
-3.460
-6.250
-17.210
0.370
20.660
15.140
65.370
87.040
11.440
6.640
3.890
4.050
2006q3
-6.010
-3.510
-6.550
-18.200
0.230
20.900
15.430
67.930
90.560
11.310
7.400
3.900
4.030
2006q4
-5.280
-3.270
-5.610
-18.960
0.340
21.320
15.680
70.910
94.470
11.320
6.430
3.850
4.020
2007q1
-5.270
-3.180
-5.850
-18.380
0.270
21.880
15.650
74.270
97.840
10.720
5.980
3.820
4.060
2007q2
-5.210
-2.940
-5.520
-14.460
0.420
22.530
15.780
80.630
100.790
11.240
6.770
3.880
4.140
2007q3
-4.940
-2.590
-5.090
-13.910
0.630
23.090
16.130
80.610
100.510
11.300
6.370
4.040
4.180
2007q4
-5.050
-2.220
-5.430
-17.870
0.480
23.530
16.120
80.920
105.200
11.580
6.770
3.610
3.880
2008q1
-4.960
-1.970
-5.430
-18.770
0.340
23.830
16.230
82.110
107.460
11.510
6.620
3.100
3.610
2008q2
-4.800
-2.060
-5.320
-19.880
0.270
23.950
16.360
83.080
109.520
11.430
6.530
2.780
3.380
2008q3
-4.660
-2.080
-5.200
-21.030
0.250
24.100
16.490
83.830
111.440
11.250
6.380
2.600
3.220
2008q4
-4.670
-1.980
-5.190
-22.100
0.250
24.300
16.630
84.600
113.310
11.100
6.320
2.520
3.110
2009q1
-4.710
-1.970
-5.180
-22.990
0.260
24.550
16.890
85.030
114.620
11.000
6.280
2.570
3.110
2009q2
-4.540
-1.950
-4.980
-23.950
0.270
24.820
17.160
85.370
115.920
10.950
6.260
2.630
3.120
2009q3
-4.380
-1.950
-4.810
-24.940
0.280
25.120
17.420
85.700
117.270
10.920
6.260
2.670
3.120
2009q4
-4.500
-1.930
-4.970
-25.870
0.280
25.440
17.690
85.990
118.520
10.920
6.260
2.690
3.130
2010q1
-4.610
-1.950
-5.040
-26.660
0.260
25.750
18.030
86.230
119.520
10.930
6.210
2.780
3.210
2010q2
-4.510
-1.990
-4.940
-27.530
0.250
26.060
18.370
86.430
120.560
10.960
6.200
2.860
3.270
2010q3
-4.390
-2.030
-4.840
-28.440
0.230
26.380
18.720
86.600
121.600
10.990
6.210
2.910
3.310
2010q4
-4.600
-2.090
-5.070
-29.310
0.200
26.700
19.080
86.800
122.630
11.020
6.220
2.930
3.350
2011q1
-4.730
-2.130
-5.230
-30.160
0.170
26.990
19.340
87.150
123.850
11.040
6.210
2.940
3.370
2011q2
-4.630
-2.170
-5.150
-31.090
0.140
27.270
19.600
87.470
125.120
11.030
6.170
2.950
3.390
2011q3
-4.510
-2.200
-5.050
-32.060
0.110
27.560
19.870
87.770
126.400
11.020
6.140
2.950
3.400
2011q4
-4.700
-2.240
-5.260
-32.990
0.090
27.860
20.140
88.090
127.660
11.010
6.110
2.950
3.410
2012q1
-4.820
-2.270
-5.390
-33.850
0.070
28.150
20.410
88.450
128.890
11.000
6.080
2.950
3.410
2012q2
-4.710
-2.300
-5.300
-34.780
0.050
28.450
20.690
88.770
130.150
10.990
6.060
2.950
3.420
2012q3
-4.600
-2.330
-5.200
-35.740
0.020
28.740
20.970
89.080
131.440
10.980
6.040
2.950
3.420
2012q4
-4.780
-2.360
-5.400
-36.670
0.000
29.040
21.250
89.400
132.700
10.970
6.030
2.950
3.420
2013q1
-4.900
-2.390
-5.520
-37.520
-0.020
29.340
21.540
89.770
133.930
10.960
6.010
2.950
3.420
2013q2
-4.790
-2.420
-5.420
-38.450
-0.030
29.640
21.830
90.110
135.190
10.950
6.000
2.950
3.420
2013q3
-4.670
-2.450
-5.320
-39.400
-0.050
29.950
22.120
90.430
136.470
10.940
5.990
2.950
3.420
2013q4
-4.860
-2.470
-5.520
-40.320
-0.070
30.260
22.410
90.770
137.740
10.930
5.980
2.950
3.430
2014q1
-4.970
-2.500
-5.640
-41.160
-0.090
30.560
22.710
91.160
138.970
10.920
5.980
2.950
3.430
2014q2
-4.850
-2.530
-5.540
-42.070
-0.110
30.870
23.020
91.510
140.240
10.920
5.970
2.950
3.430
2014q3
-4.740
-2.560
-5.440
-43.010
-0.120
31.180
23.320
91.860
141.520
10.910
5.970
2.950
3.420
2014q4
-4.920
-2.580
-5.630
-43.920
-0.140
31.500
23.630
92.220
142.790
10.900
5.960
2.950
3.420
2015q1
-5.030
-2.610
-5.750
-44.760
-0.160
31.810
23.940
92.630
144.030
10.890
5.960
2.950
3.420
2015q2
-4.910
-2.640
-5.640
-45.660
-0.180
32.130
24.260
93.010
145.310
10.880
5.950
2.950
3.420
2015q3
-4.810
-2.660
-5.550
-46.590
-0.200
32.450
24.580
93.380
146.600
10.870
5.950
2.950
3.420
2015q4
-4.980
-2.690
-5.740
-47.490
-0.210
32.770
24.900
93.770
147.880
10.860
5.950
2.950
3.420
2016q1
-5.090
-2.710
-5.850
-48.320
-0.230
33.100
25.220
94.200
149.130
10.850
5.950
2.950
3.420
2016q2
-4.970
-2.740
-5.750
-49.210
-0.250
33.420
25.550
94.610
150.420
10.840
5.940
2.950
3.420
2016q3
-4.870
-2.770
-5.660
-50.120
-0.260
33.750
25.890
95.010
151.720
10.830
5.940
2.950
3.420
2016q4
-5.040
-2.790
-5.840
-51.000
-0.280
34.080
26.220
95.430
153.020
10.820
5.940
2.950
3.420
2017q1
-5.140
-2.820
-5.950
-51.830
-0.300
34.410
26.570
95.890
154.290
10.810
5.940
2.950
3.420
2017q2
-5.030
-2.840
-5.850
-52.700
-0.310
34.740
26.910
96.330
155.590
10.810
5.940
2.950
3.410
2017q3
-4.930
-2.870
-5.760
-53.600
-0.330
35.080
27.260
96.770
156.900
10.800
5.940
2.950
3.410
2017q4
-5.100
-2.890
-5.940
-54.480
-0.350
35.420
27.610
97.230
158.210
10.790
5.940
2.950
3.410
2018q1
-5.200
-2.920
-6.050
-55.290
-0.360
35.760
27.970
97.720
159.500
10.780
5.940
2.950
3.410
2018q2
-5.090
-2.950
-5.950
-56.160
-0.380
36.100
28.330
98.200
160.820
10.770
5.940
2.950
3.410
2018q3
-4.990
-2.970
-5.870
-57.040
-0.390
36.440
28.690
98.680
162.160
10.760
5.940
2.950
3.410
2018q4
-5.160
-3.000
-6.050
-57.910
-0.410
36.790
29.060
99.180
163.490
10.750
5.940
2.950
3.410
2019q1
-5.260
-3.020
-6.150
-58.710
-0.420
37.140
29.430
99.710
164.810
10.740
5.940
2.950
3.400
2019q2
-5.140
-3.050
-6.050
-59.570
-0.440
37.490
29.800
100.230
166.150
10.740
5.940
2.950
3.400
2019q3
-5.050
-3.070
-5.970
-60.440
-0.450
37.840
30.180
100.750
167.510
10.730
5.940
2.950
3.400
2019q4
-5.220
-3.100
-6.150
-61.290
-0.470
38.200
30.570
101.290
168.870
10.720
5.940
2.950
3.400
2020q1
-5.320
-3.130
-6.250
-62.090
-0.480
38.560
30.960
101.870
170.210
10.710
5.940
2.950
3.400
2020q2
-5.200
-3.150
-6.140
-62.930
-0.500
38.920
31.350
102.440
171.580
10.700
5.940
2.950
3.400
2020q3
-5.120
-3.180
-6.070
-63.790
-0.510
39.280
31.740
103.000
172.970
10.690
5.940
2.950
3.390
2020q4
-5.280
-3.200
-6.240
-64.630
-0.530
39.650
32.140
103.590
174.350
10.680
5.940
2.950
3.390

Exhibit 3:  Alternative Projections

Data for Exhibit 3 immediately follows

Data for Exhibit 3 below.

Data for Exhibit 3

Quarter
Real Exchange Rate: Baseline
Real Exchange Rate: U.S. Growth = Foreign Growth
Real Exchange Rate: Oil Prices Rise
Real Exchange Rate: Dollar Falls & Higher Interest Rates
Real Exchange Rate: Higher Foreign Growth
Foreign GDP: Baseline
Foreign GDP: U.S. Growth = Foreign Growth
Foreign GDP: Oil Prices Rise
Foreign GDP: Dollar Falls & Higher Interest Rates
Foreign GDP: Higher Foreign Growth
U.S. GDP: Baseline
U.S. GDP: U.S. Growth = Foreign Growth
U.S. GDP: Oil Prices Rise
U.S. GDP: Dollar Falls & Higher Interest Rates
U.S. GDP: Higher Foreign Growth
2000q1
100.000
100.000
100.000
100.000
100.000
5.810
5.810
5.810
5.810
5.810
4.080
4.080
4.080
4.080
4.080
2000q2
102.460
102.460
102.460
102.460
102.460
5.680
5.680
5.680
5.680
5.680
4.850
4.850
4.850
4.850
4.850
2000q3
103.710
103.710
103.710
103.710
103.710
5.390
5.390
5.390
5.390
5.390
3.520
3.520
3.520
3.520
3.520
2000q4
106.410
106.410
106.410
106.410
106.410
4.180
4.180
4.180
4.180
4.180
2.240
2.240
2.240
2.240
2.240
2001q1
107.400
107.400
107.400
107.400
107.400
2.740
2.740
2.740
2.740
2.740
1.860
1.860
1.860
1.860
1.860
2001q2
109.580
109.580
109.580
109.580
109.580
1.610
1.610
1.610
1.610
1.610
0.590
0.590
0.590
0.590
0.590
2001q3
109.170
109.170
109.170
109.170
109.170
0.430
0.430
0.430
0.430
0.430
0.350
0.350
0.350
0.350
0.350
2001q4
109.590
109.590
109.590
109.590
109.590
0.370
0.370
0.370
0.370
0.370
0.230
0.230
0.230
0.230
0.230
2002q1
111.170
111.170
111.170
111.170
111.170
0.940
0.940
0.940
0.940
0.940
1.030
1.030
1.030
1.030
1.030
2002q2
109.440
109.440
109.440
109.440
109.440
1.990
1.990
1.990
1.990
1.990
1.270
1.270
1.270
1.270
1.270
2002q3
107.490
107.490
107.490
107.490
107.490
2.970
2.970
2.970
2.970
2.970
2.220
2.220
2.220
2.220
2.220
2002q4
108.300
108.300
108.300
108.300
108.300
3.100
3.100
3.100
3.100
3.100
1.870
1.870
1.870
1.870
1.870
2003q1
106.160
106.160
106.160
106.160
106.160
2.410
2.410
2.410
2.410
2.410
1.490
1.490
1.490
1.490
1.490
2003q2
102.210
102.210
102.210
102.210
102.210
1.770
1.770
1.770
1.770
1.770
1.810
1.810
1.810
1.810
1.810
2003q3
102.490
102.490
102.490
102.490
102.490
2.110
2.110
2.110
2.110
2.110
3.050
3.050
3.050
3.050
3.050
2003q4
99.200
99.200
99.200
99.200
99.200
3.020
3.020
3.020
3.020
3.020
3.680
3.680
3.680
3.680
3.680
2004q1
97.530
97.530
97.530
97.530
97.530
3.930
3.930
3.930
3.930
3.930
4.120
4.120
4.120
4.120
4.120
2004q2
99.800
99.800
99.800
99.800
99.800
4.550
4.550
4.550
4.550
4.550
4.130
4.130
4.130
4.130
4.130
2004q3
98.960
98.960
98.960
98.960
98.960
4.270
4.270
4.270
4.270
4.270
3.170
3.170
3.170
3.170
3.170
2004q4
95.690
95.690
95.690
95.690
95.690
3.840
3.840
3.840
3.840
3.840
3.150
3.150
3.150
3.150
3.150
2005q1
94.750
94.750
94.750
94.750
94.750
3.310
3.310
3.310
3.310
3.310
3.170
3.170
3.170
3.170
3.170
2005q2
95.960
95.960
95.960
95.960
95.960
3.320
3.320
3.320
3.320
3.320
3.010
3.010
3.010
3.010
3.010
2005q3
96.990
96.990
96.990
96.990
96.990
3.700
3.700
3.700
3.700
3.700
3.220
3.220
3.220
3.220
3.220
2005q4
98.080
98.080
98.080
98.080
98.080
3.880
3.880
3.880
3.880
3.880
2.880
2.880
2.880
2.880
2.880
2006q1
96.610
96.610
96.610
96.610
96.610
4.490
4.490
4.490
4.490
4.490
3.310
3.310
3.310
3.310
3.310
2006q2
95.420
95.420
95.420
95.420
95.420
4.540
4.540
4.540
4.540
4.540
3.220
3.220
3.220
3.220
3.220
2006q3
95.360
95.360
95.360
95.360
95.360
4.070
4.070
4.070
4.070
4.070
2.370
2.370
2.370
2.370
2.370
2006q4
93.960
93.960
93.960
93.960
93.960
3.990
3.990
3.990
3.990
3.990
2.600
2.600
2.600
2.600
2.600
2007q1
93.910
93.910
93.910
93.910
93.910
3.880
3.880
3.880
3.880
3.880
1.550
1.550
1.550
1.550
1.550
2007q2
92.030
92.030
92.030
92.030
92.030
4.000
4.000
4.000
4.000
4.000
1.890
1.890
1.890
1.890
1.890
2007q3
90.160
90.160
90.160
90.160
90.160
4.360
4.360
4.360
4.360
4.360
2.840
2.840
2.840
2.840
2.840
2007q4
87.180
87.180
87.180
87.180
87.180
4.160
4.160
4.160
4.160
4.160
2.420
2.420
2.420
2.420
2.420
2008q1
87.180
87.180
87.180
86.960
87.180
3.660
3.660
3.660
3.660
3.660
2.670
2.670
2.670
2.670
2.670
2008q2
87.180
87.180
87.180
86.750
87.180
3.010
3.010
3.010
3.010
3.010
2.120
2.120
2.120
2.120
2.120
2008q3
87.180
87.180
87.180
86.530
87.180
2.440
2.440
2.440
2.440
2.440
1.310
1.310
1.310
1.310
1.310
2008q4
87.190
87.190
87.190
86.320
87.190
2.280
2.280
2.280
2.280
2.280
1.600
1.600
1.600
1.600
1.600
2009q1
87.190
87.190
87.190
86.100
87.190
2.490
2.490
2.490
2.490
2.490
1.820
1.820
1.820
1.820
1.820
2009q2
87.190
87.190
87.190
85.890
87.190
2.890
2.890
2.890
2.890
2.890
2.050
2.050
2.050
2.050
2.050
2009q3
87.190
87.190
87.190
85.680
87.190
3.260
3.260
3.260
3.260
3.260
2.270
2.270
2.270
2.270
2.270
2009q4
87.190
87.190
87.190
85.470
87.190
3.570
3.570
3.570
3.570
3.570
2.500
2.500
2.500
2.500
2.500
2010q1
87.200
87.200
87.200
85.260
87.200
3.800
3.660
3.800
3.800
3.910
2.660
2.790
2.660
2.660
2.660
2010q2
87.200
87.200
87.200
85.050
87.200
4.000
3.730
4.000
4.000
4.230
2.810
3.080
2.810
2.810
2.810
2010q3
87.200
87.200
87.200
84.840
87.200
4.160
3.760
4.160
4.160
4.520
2.970
3.370
2.970
2.970
2.970
2010q4
87.200
87.200
87.200
84.630
87.200
4.300
3.770
4.300
4.300
4.770
3.130
3.660
3.130
3.130
3.130
2011q1
87.210
87.210
87.210
84.420
87.210
4.110
3.580
4.110
4.110
4.580
2.940
3.480
2.940
2.940
2.940
2011q2
87.210
87.210
87.210
84.210
87.210
3.890
3.370
3.890
3.890
4.370
2.760
3.290
2.760
2.760
2.760
2011q3
87.210
87.210
87.210
84.000
87.210
3.680
3.160
3.680
3.680
4.150
2.580
3.110
2.580
2.580
2.580
2011q4
87.210
87.210
87.210
83.800
87.210
3.470
2.950
3.470
3.470
3.940
2.400
2.930
2.400
2.400
2.400
2012q1
87.210
87.210
87.210
83.590
87.210
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2012q2
87.220
87.220
87.220
83.380
87.220
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2012q3
87.220
87.220
87.220
83.180
87.220
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2012q4
87.220
87.220
87.220
82.970
87.220
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2013q1
87.220
87.220
87.220
82.770
87.220
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2013q2
87.230
87.230
87.230
82.560
87.230
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2013q3
87.230
87.230
87.230
82.360
87.230
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2013q4
87.230
87.230
87.230
82.160
87.230
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2014q1
87.230
87.230
87.230
81.960
87.230
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2014q2
87.240
87.240
87.240
81.750
87.240
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2014q3
87.240
87.240
87.240
81.550
87.240
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2014q4
87.240
87.240
87.240
81.350
87.240
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2015q1
87.240
87.240
87.240
81.150
87.240
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2015q2
87.240
87.240
87.240
80.950
87.240
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2015q3
87.250
87.250
87.250
80.750
87.250
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2015q4
87.250
87.250
87.250
80.550
87.250
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2016q1
87.250
87.250
87.250
80.350
87.250
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2016q2
87.250
87.250
87.250
80.150
87.250
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2016q3
87.260
87.260
87.260
79.960
87.260
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2016q4
87.260
87.260
87.260
79.760
87.260
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2017q1
87.260
87.260
87.260
79.560
87.260
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2017q2
87.260
87.260
87.260
79.370
87.260
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2017q3
87.260
87.260
87.260
79.170
87.260
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2017q4
87.270
87.270
87.270
78.980
87.270
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2018q1
87.270
87.270
87.270
78.780
87.270
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2018q2
87.270
87.270
87.270
78.590
87.270
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2018q3
87.270
87.270
87.270
78.390
87.270
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2018q4
87.280
87.280
87.280
78.200
87.280
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2019q1
87.280
87.280
87.280
78.010
87.280
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2019q2
87.280
87.280
87.280
77.820
87.280
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2019q3
87.280
87.280
87.280
77.620
87.280
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2019q4
87.280
87.280
87.280
77.430
87.280
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2020q1
87.290
87.290
87.290
77.240
87.290
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2020q2
87.290
87.290
87.290
77.050
87.290
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2020q3
87.290
87.290
87.290
76.860
87.290
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400
2020q4
87.290
87.290
87.290
76.670
87.290
3.460
2.930
3.460
3.460
3.920
2.400
2.930
2.400
2.400
2.400

Data for Exhibit 3 (continued)

Quarter
Oil Import Price: Baseline
Oil Import Price: U.S. Growth = Foreign Growth
Oil Import Price: Oil Prices Rise
Oil Import Price: Dollar Falls & Higher Interest Rates
Oil Import Price: Higher Foreign Growth
U.S. Short Term Interest Rate: Baseline
U.S. Short Term Interest Rate: U.S. Growth = Foreign Growth
U.S. Short Term Interest Rate: Oil Prices Rise
U.S. Short Term Interest Rate: Dollar Falls & Higher Interest Rates
U.S. Short Term Interest Rate: Higher Foreign Growth
U.S. Long Term Interest Rate: Baseline
U.S. Long Term Interest Rate: U.S. Growth = Foreign Growth
U.S. Long Term Interest Rate: Oil Prices Rise
U.S. Long Term Interest Rate: Dollar Falls & Higher Interest Rates
U.S. Long Term Interest Rate: Higher Foreign Growth
2000q1
26.080
26.080
26.080
26.080
26.080
5.520
5.520
5.520
5.520
5.520
6.480
6.480
6.480
6.480
6.480
2000q2
26.190
26.190
26.190
26.190
26.190
5.710
5.710
5.710
5.710
5.710
6.180
6.180
6.180
6.180
6.180
2000q3
28.600
28.600
28.600
28.600
28.600
6.020
6.020
6.020
6.020
6.020
5.890
5.890
5.890
5.890
5.890
2000q4
28.930
28.930
28.930
28.930
28.930
6.020
6.020
6.020
6.020
6.020
5.570
5.570
5.570
5.570
5.570
2001q1
25.150
25.150
25.150
25.150
25.150
4.820
4.820
4.820
4.820
4.820
5.050
5.050
5.050
5.050
5.050
2001q2
24.210
24.210
24.210
24.210
24.210
3.660
3.660
3.660
3.660
3.660
5.270
5.270
5.270
5.270
5.270
2001q3
23.510
23.510
23.510
23.510
23.510
3.170
3.170
3.170
3.170
3.170
4.980
4.980
4.980
4.980
4.980
2001q4
18.390
18.390
18.390
18.390
18.390
1.910
1.910
1.910
1.910
1.910
4.770
4.770
4.770
4.770
4.770
2002q1
18.370
18.370
18.370
18.370
18.370
1.720
1.720
1.720
1.720
1.720
5.080
5.080
5.080
5.080
5.080
2002q2
24.050
24.050
24.050
24.050
24.050
1.720
1.720
1.720
1.720
1.720
5.100
5.100
5.100
5.100
5.100
2002q3
25.530
25.530
25.530
25.530
25.530
1.640
1.640
1.640
1.640
1.640
4.260
4.260
4.260
4.260
4.260
2002q4
25.750
25.750
25.750
25.750
25.750
1.330
1.330
1.330
1.330
1.330
4.010
4.010
4.010
4.010
4.010
2003q1
30.730
30.730
30.730
30.730
30.730
1.160
1.160
1.160
1.160
1.160
3.920
3.920
3.920
3.920
3.920
2003q2
26.420
26.420
26.420
26.420
26.420
1.040
1.040
1.040
1.040
1.040
3.620
3.620
3.620
3.620
3.620
2003q3
28.040
28.040
28.040
28.040
28.040
0.930
0.930
0.930
0.930
0.930
4.230
4.230
4.230
4.230
4.230
2003q4
27.740
27.740
27.740
27.740
27.740
0.920
0.920
0.920
0.920
0.920
4.290
4.290
4.290
4.290
4.290
2004q1
30.920
30.920
30.920
30.920
30.920
0.920
0.920
0.920
0.920
0.920
4.020
4.020
4.020
4.020
4.020
2004q2
34.550
34.550
34.550
34.550
34.550
1.080
1.080
1.080
1.080
1.080
4.600
4.600
4.600
4.600
4.600
2004q3
37.560
37.560
37.560
37.560
37.560
1.490
1.490
1.490
1.490
1.490
4.300
4.300
4.300
4.300
4.300
2004q4
40.910
40.910
40.910
40.910
40.910
2.010
2.010
2.010
2.010
2.010
4.170
4.170
4.170
4.170
4.170
2005q1
39.900
39.900
39.900
39.900
39.900
2.540
2.540
2.540
2.540
2.540
4.300
4.300
4.300
4.300
4.300
2005q2
46.280
46.280
46.280
46.280
46.280
2.860
2.860
2.860
2.860
2.860
4.160
4.160
4.160
4.160
4.160
2005q3
55.290
55.290
55.290
55.290
55.290
3.360
3.360
3.360
3.360
3.360
4.210
4.210
4.210
4.210
4.210
2005q4
55.390
55.390
55.390
55.390
55.390
3.830
3.830
3.830
3.830
3.830
4.490
4.490
4.490
4.490
4.490
2006q1
55.090
55.090
55.090
55.090
55.090
4.390
4.390
4.390
4.390
4.390
4.570
4.570
4.570
4.570
4.570
2006q2
63.810
63.810
63.810
63.810
63.810
4.700
4.700
4.700
4.700
4.700
5.070
5.070
5.070
5.070
5.070
2006q3
66.570
66.570
66.570
66.570
66.570
4.910
4.910
4.910
4.910
4.910
4.900
4.900
4.900
4.900
4.900
2006q4
55.330
55.330
55.330
55.330
55.330
4.900
4.900
4.900
4.900
4.900
4.630
4.630
4.630
4.630
4.630
2007q1
54.390
54.390
54.390
54.390
54.390
4.980
4.980
4.980
4.980
4.980
4.680
4.680
4.680
4.680
4.680
2007q2
63.840
63.840
63.840
63.840
63.840
4.740
4.740
4.740
4.740
4.740
4.850
4.850
4.850
4.850
4.850
2007q3
70.310
70.310
70.310
70.310
70.310
4.300
4.300
4.300
4.300
4.300
4.730
4.730
4.730
4.730
4.730
2007q4
80.340
80.340
80.340
80.340
80.340
3.390
3.390
3.390
3.390
3.390
4.260
4.260
4.260
4.260
4.260
2008q1
80.340
80.340
81.330
80.340
80.340
3.000
3.000
3.000
4.000
3.000
3.500
3.500
3.500
4.500
3.500
2008q2
80.340
80.340
82.330
80.340
80.340
3.000
3.000
3.000
4.000
3.000
3.500
3.500
3.500
4.500
3.500
2008q3
80.340
80.340
83.340
80.340
80.340
3.000
3.000
3.000
4.000
3.000
3.500
3.500
3.500
4.500
3.500
2008q4
80.340
80.340
84.360
80.340
80.340
3.000
3.000
3.000
4.000
3.000
3.500
3.500
3.500
4.500
3.500
2009q1
80.340
80.340
85.400
80.340
80.340
3.200
3.200
3.200
4.200
3.200
3.950
3.950
3.950
4.950
3.950
2009q2
80.340
80.340
86.440
80.340
80.340
3.200
3.200
3.200
4.200
3.200
3.950
3.950
3.950
4.950
3.950
2009q3
80.340
80.340
87.510
80.340
80.340
3.200
3.200
3.200
4.200
3.200
3.950
3.950
3.950
4.950
3.950
2009q4
80.340
80.340
88.580
80.340
80.340
3.200
3.200
3.200
4.200
3.200
3.950
3.950
3.950
4.950
3.950
2010q1
80.340
80.340
89.670
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2010q2
80.340
80.340
90.770
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2010q3
80.340
80.340
91.880
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2010q4
80.340
80.340
93.010
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2011q1
80.340
80.340
94.150
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2011q2
80.340
80.340
95.310
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2011q3
80.340
80.340
96.470
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2011q4
80.340
80.340
97.660
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2012q1
80.340
80.340
98.860
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2012q2
80.340
80.340
100.070
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2012q3
80.340
80.340
101.300
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2012q4
80.340
80.340
102.540
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2013q1
80.340
80.340
103.800
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2013q2
80.340
80.340
105.070
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2013q3
80.340
80.340
106.360
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2013q4
80.340
80.340
107.670
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2014q1
80.340
80.340
108.990
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2014q2
80.340
80.340
110.330
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2014q3
80.340
80.340
111.680
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2014q4
80.340
80.340
113.050
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2015q1
80.340
80.340
114.440
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2015q2
80.340
80.340
115.840
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2015q3
80.340
80.340
117.270
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2015q4
80.340
80.340
118.700
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2016q1
80.340
80.340
120.160
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2016q2
80.340
80.340
121.640
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2016q3
80.340
80.340
123.130
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2016q4
80.340
80.340
124.640
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2017q1
80.340
80.340
126.170
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2017q2
80.340
80.340
127.720
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2017q3
80.340
80.340
129.290
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2017q4
80.340
80.340
130.870
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2018q1
80.340
80.340
132.480
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2018q2
80.340
80.340
134.100
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2018q3
80.340
80.340
135.750
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2018q4
80.340
80.340
137.420
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2019q1
80.340
80.340
139.100
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2019q2
80.340
80.340
140.810
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2019q3
80.340
80.340
142.540
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2019q4
80.340
80.340
144.290
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2020q1
80.340
80.340
146.060
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2020q2
80.340
80.340
147.850
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2020q3
80.340
80.340
149.660
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400
2020q4
80.340
80.340
151.500
80.340
80.340
3.400
3.400
3.400
4.400
3.400
4.400
4.400
4.400
5.400
4.400

Data for Exhibit 3 (continued)

Quarter
Rate of Return on Overall Portfolio Investment: Baseline
Rate of Return on Overall Portfolio Investment: U.S. Growth = Foreign Growth
Rate of Return on Overall Portfolio Investment: Oil Prices Rise
Rate of Return on Overall Portfolio Investment: Dollar Falls & Higher Interest Rates
Rate of Return on Overall Portfolio Investment: Higher Foreign Growth
Payments: Baseline
Payments: U.S. Growth = Foreign Growth
Payments: Oil Prices Rise
Payments: Dollar Falls & Higher Interest Rates
Payments: Higher Foreign Growth
Receipts: Baseline
Receipts: U.S. Growth = Foreign Growth
Receipts: Oil Prices Rise
Receipts: Dollar Falls & Higher Interest Rates
Receipts: Higher Foreign Growth
2000q1
7.040
7.040
7.040
7.040
7.040
5.800
5.800
5.800
5.800
5.800
10.490
10.490
10.490
10.490
10.490
2000q2
7.220
7.220
7.220
7.220
7.220
5.520
5.520
5.520
5.520
5.520
10.590
10.590
10.590
10.590
10.590
2000q3
7.290
7.290
7.290
7.290
7.290
4.280
4.280
4.280
4.280
4.280
9.840
9.840
9.840
9.840
9.840
2000q4
6.210
6.210
6.210
6.210
6.210
3.520
3.520
3.520
3.520
3.520
10.780
10.780
10.780
10.780
10.780
2001q1
6.080
6.080
6.080
6.080
6.080
2.130
2.130
2.130
2.130
2.130
8.910
8.910
8.910
8.910
8.910
2001q2
5.530
5.530
5.530
5.530
5.530
1.120
1.120
1.120
1.120
1.120
8.580
8.580
8.580
8.580
8.580
2001q3
5.140
5.140
5.140
5.140
5.140
1.880
1.880
1.880
1.880
1.880
7.760
7.760
7.760
7.760
7.760
2001q4
4.090
4.090
4.090
4.090
4.090
-1.580
-1.580
-1.580
-1.580
-1.580
7.390
7.390
7.390
7.390
7.390
2002q1
3.660
3.660
3.660
3.660
3.660
2.070
2.070
2.070
2.070
2.070
8.040
8.040
8.040
8.040
8.040
2002q2
3.670
3.670
3.670
3.670
3.670
3.480
3.480
3.480
3.480
3.480
8.350
8.350
8.350
8.350
8.350
2002q3
3.200
3.200
3.200
3.200
3.200
3.770
3.770
3.770
3.770
3.770
8.590
8.590
8.590
8.590
8.590
2002q4
3.100
3.100
3.100
3.100
3.100
2.160
2.160
2.160
2.160
2.160
8.170
8.170
8.170
8.170
8.170
2003q1
2.780
2.780
2.780
2.780
2.780
4.700
4.700
4.700
4.700
4.700
8.980
8.980
8.980
8.980
8.980
2003q2
2.660
2.660
2.660
2.660
2.660
4.470
4.470
4.470
4.470
4.470
9.350
9.350
9.350
9.350
9.350
2003q3
2.710
2.710
2.710
2.710
2.710
5.020
5.020
5.020
5.020
5.020
9.460
9.460
9.460
9.460
9.460
2003q4
2.680
2.680
2.680
2.680
2.680
5.070
5.070
5.070
5.070
5.070
10.770
10.770
10.770
10.770
10.770
2004q1
2.660
2.660
2.660
2.660
2.660
5.300
5.300
5.300
5.300
5.300
11.190
11.190
11.190
11.190
11.190
2004q2
2.810
2.810
2.810
2.810
2.810
6.720
6.720
6.720
6.720
6.720
11.110
11.110
11.110
11.110
11.110
2004q3
2.820
2.820
2.820
2.820
2.820
6.050
6.050
6.050
6.050
6.050
11.080
11.080
11.080
11.080
11.080
2004q4
3.700
3.700
3.700
3.700
3.700
6.340
6.340
6.340
6.340
6.340
10.740
10.740
10.740
10.740
10.740
2005q1
3.010
3.010
3.010
3.010
3.010
6.440
6.440
6.440
6.440
6.440
10.250
10.250
10.250
10.250
10.250
2005q2
3.370
3.370
3.370
3.370
3.370
6.400
6.400
6.400
6.400
6.400
10.440
10.440
10.440
10.440
10.440
2005q3
3.760
3.760
3.760
3.760
3.760
5.590
5.590
5.590
5.590
5.590
10.830
10.830
10.830
10.830
10.830
2005q4
4.070
4.070
4.070
4.070
4.070
7.740
7.740
7.740
7.740
7.740
11.150
11.150
11.150
11.150
11.150
2006q1
4.360
4.360
4.360
4.360
4.360
6.700
6.700
6.700
6.700
6.700
11.570
11.570
11.570
11.570
11.570
2006q2
4.590
4.590
4.590
4.590
4.590
6.860
6.860
6.860
6.860
6.860
11.890
11.890
11.890
11.890
11.890
2006q3
4.630
4.630
4.630
4.630
4.630
7.610
7.610
7.610
7.610
7.610
11.530
11.530
11.530
11.530
11.530
2006q4
4.760
4.760
4.760
4.760
4.760
6.600
6.600
6.600
6.600
6.600
11.660
11.660
11.660
11.660
11.660
2007q1
4.910
4.910
4.910
4.910
4.910
6.040
6.040
6.040
6.040
6.040
11.130
11.130
11.130
11.130
11.130
2007q2
4.510
4.510
4.510
4.510
4.510
6.930
6.930
6.930
6.930
6.930
11.760
11.760
11.760
11.760
11.760
2007q3
4.770
4.770
4.770
4.770
4.770
6.610
6.610
6.610
6.610
6.610
11.760
11.760
11.760
11.760
11.760
2007q4
5.860
5.860
5.860
5.860
5.860
6.820
6.820
6.820
6.820
6.820
11.890
11.890
11.890
11.890
11.890
2008q1
5.530
5.530
5.530
5.510
5.530
6.730
6.730
6.730
6.730
6.730
11.770
11.770
11.790
11.770
11.770
2008q2
5.550
5.550
5.550
5.460
5.550
6.650
6.650
6.650
6.650
6.650
11.590
11.590
11.650
11.590
11.590
2008q3
5.360
5.360
5.360
5.350
5.360
6.490
6.490
6.490
6.490
6.490
11.420
11.420
11.510
11.430
11.420
2008q4
5.080
5.080
5.080
5.240
5.080
6.440
6.440
6.440
6.440
6.440
11.290
11.290
11.400
11.300
11.290
2009q1
4.860
4.860
4.860
5.210
4.860
6.440
6.440
6.440
6.440
6.440
11.230
11.230
11.370
11.240
11.230
2009q2
4.690
4.690
4.680
5.200
4.690
6.420
6.420
6.420
6.420
6.420
11.200
11.200
11.370
11.200
11.200
2009q3
4.560
4.560
4.550
5.210
4.560
6.420
6.420
6.420
6.420
6.420
11.180
11.180
11.380
11.180
11.180
2009q4
4.460
4.460
4.450
5.220
4.460
6.430
6.430
6.430
6.430
6.430
11.180
11.180
11.410
11.180
11.180
2010q1
4.460
4.450
4.450
5.280
4.460
6.410
6.410
6.410
6.410
6.410
11.210
11.210
11.460
11.210
11.210
2010q2
4.460
4.460
4.450
5.340
4.460
6.400
6.400
6.400
6.400
6.400
11.240
11.240
11.520
11.240
11.240
2010q3
4.480
4.490
4.470
5.400
4.480
6.400
6.400
6.400
6.400
6.400
11.270
11.270
11.580
11.270
11.270
2010q4
4.510
4.520
4.500
5.450
4.510
6.420
6.420
6.420
6.420
6.420
11.300
11.300
11.640
11.300
11.300
2011q1
4.540
4.550
4.520
5.500
4.530
6.370
6.370
6.370
6.370
6.370
11.290
11.290
11.660
11.290
11.290
2011q2
4.570
4.580
4.550
5.540
4.560
6.330
6.330
6.330
6.330
6.330
11.270
11.270
11.670
11.280
11.270
2011q3
4.580
4.590
4.560
5.560
4.570
6.290
6.290
6.290
6.290
6.290
11.260
11.260
11.690
11.270
11.260
2011q4
4.580
4.590
4.550
5.560
4.570
6.260
6.260
6.260
6.260
6.260
11.250
11.250
11.710
11.260
11.250
2012q1
4.570
4.580
4.540
5.560
4.560
6.230
6.230
6.230
6.230
6.230
11.240
11.240
11.730
11.250
11.240
2012q2
4.570
4.580
4.540
5.560
4.550
6.210
6.210
6.210
6.210
6.210
11.230
11.230
11.750
11.230
11.230
2012q3
4.560
4.570
4.520
5.550
4.540
6.190
6.190
6.190
6.190
6.190
11.220
11.220
11.770
11.220
11.220
2012q4
4.540
4.550
4.510
5.540
4.530
6.180
6.180
6.180
6.180
6.180
11.210
11.210
11.780
11.210
11.210
2013q1
4.520
4.530
4.490
5.520
4.510
6.160
6.160
6.160
6.160
6.160
11.200
11.200
11.800
11.200
11.200
2013q2
4.510
4.520
4.470
5.510
4.500
6.150
6.150
6.150
6.150
6.150
11.190
11.190
11.820
11.190
11.190
2013q3
4.490
4.500
4.450
5.490
4.480
6.140
6.140
6.140
6.140
6.140
11.180
11.180
11.840
11.180
11.180
2013q4
4.480
4.480
4.430
5.470
4.460
6.130
6.130
6.130
6.130
6.130
11.170
11.170
11.860
11.170
11.170
2014q1
4.460
4.460
4.410
5.460
4.440
6.120
6.120
6.120
6.120
6.120
11.160
11.160
11.880
11.160
11.160
2014q2
4.440
4.450
4.400
5.440
4.430
6.120
6.120
6.120
6.120
6.120
11.150
11.150
11.900
11.150
11.150
2014q3
4.430
4.430
4.380
5.430
4.420
6.110
6.110
6.110
6.110
6.110
11.140
11.140
11.920
11.140
11.140
2014q4
4.410
4.410
4.360
5.410
4.400
6.110
6.110
6.110
6.110
6.110
11.130
11.130
11.940
11.130
11.130
2015q1
4.390
4.390
4.340
5.390
4.380
6.100
6.100
6.100
6.100
6.100
11.120
11.120
11.960
11.120
11.120
2015q2
4.380
4.370
4.330
5.380
4.370
6.100
6.100
6.100
6.100
6.100
11.110
11.110
11.980
11.110
11.110
2015q3
4.370
4.360
4.310
5.370
4.360
6.100
6.100
6.100
6.100
6.100
11.100
11.100
12.000
11.100
11.100
2015q4
4.350
4.340
4.290
5.350
4.350
6.090
6.090
6.090
6.090
6.090
11.090
11.090
12.030
11.090
11.090
2016q1
4.340
4.320
4.270
5.340
4.330
6.090
6.090
6.090
6.090
6.090
11.080
11.080
12.050
11.080
11.080
2016q2
4.320
4.310
4.260
5.330
4.320
6.090
6.090
6.090
6.090
6.090
11.070
11.070
12.070
11.070
11.070
2016q3
4.310
4.290
4.250
5.320
4.310
6.090
6.090
6.090
6.090
6.090
11.060
11.060
12.090
11.060
11.060
2016q4
4.300
4.270
4.230
5.300
4.300
6.090
6.090
6.090
6.090
6.090
11.050
11.050
12.110
11.050
11.050
2017q1
4.280
4.260
4.210
5.290
4.280
6.080
6.080
6.080
6.080
6.080
11.040
11.040
12.130
11.040
11.040
2017q2
4.270
4.240
4.200
5.280
4.270
6.080
6.080
6.080
6.080
6.080
11.030
11.030
12.150
11.030
11.030
2017q3
4.260
4.230
4.190
5.270
4.260
6.080
6.080
6.080
6.080
6.080
11.020
11.020
12.180
11.020
11.020
2017q4
4.250
4.210
4.170
5.260
4.250
6.080
6.080
6.080
6.080
6.080
11.010
11.010
12.200
11.020
11.010
2018q1
4.240
4.200
4.160
5.250
4.240
6.080
6.080
6.080
6.080
6.080
11.000
11.000
12.220
11.010
11.000
2018q2
4.230
4.180
4.150
5.240
4.230
6.080
6.080
6.080
6.080
6.080
10.990
10.990
12.240
11.000
10.990
2018q3
4.220
4.170
4.140
5.230
4.230
6.080
6.080
6.080
6.080
6.080
10.980
10.980
12.270
10.990
10.980
2018q4
4.200
4.160
4.120
5.220
4.220
6.080
6.080
6.080
6.080
6.080
10.970
10.970
12.290
10.980
10.970
2019q1
4.190
4.140
4.110
5.210
4.210
6.080
6.080
6.080
6.080
6.080
10.960
10.960
12.310
10.970
10.960
2019q2
4.180
4.130
4.100
5.200
4.200
6.080
6.080
6.080
6.080
6.080
10.960
10.960
12.340
10.960
10.960
2019q3
4.170
4.120
4.090
5.200
4.190
6.080
6.080
6.080
6.080
6.080
10.950
10.950
12.360
10.950
10.950
2019q4
4.160
4.100
4.080
5.190
4.180
6.080
6.080
6.080
6.080
6.080
10.940
10.940
12.380
10.940
10.940
2020q1
4.150
4.090
4.070
5.180
4.170
6.080
6.080
6.080
6.080
6.080
10.930
10.930
12.410
10.930
10.930
2020q2
4.150
4.080
4.060
5.170
4.170
6.080
6.080
6.080
6.080
6.080
10.920
10.920
12.430
10.920
10.920
2020q3
4.140
4.070
4.050
5.170
4.160
6.080
6.080
6.080
6.080
6.080
10.910
10.910
12.450
10.920
10.910
2020q4
4.130
4.060
4.040
5.160
4.150
6.080
6.080
6.080
6.080
6.080
10.900
10.900
12.480
10.910
10.900

Data for Exhibit 3 (continued)

Quarter
Real Exports: Baseline
Real Exports: U.S. Growth = Foreign Growth
Real Exports: Oil Prices Rise
Real Exports: Dollar Falls & Higher Interest Rates
Real Exports: Higher Foreign Growth
Real Imports: Baseline
Real Imports: U.S. Growth = Foreign Growth
Real Imports: Oil Prices Rise
Real Imports: Dollar Falls & Higher Interest Rates
Real Imports: Higher Foreign Growth
Nominal Trade Balance: Baseline
Nominal Trade Balance: U.S. Growth = Foreign Growth
Nominal Trade Balance:Oil Prices Rise
Nominal Trade Balance: Dollar Falls & Higher Interest Rates
Nominal Trade Balance: Higher Foreign Growth
2000q1
8.24
8.24
8.24
8.24
8.24
13.63
13.63
13.63
13.63
13.63
-3.74
-3.74
-3.74
-3.74
-3.74
2000q2
10.16
10.16
10.16
10.16
10.16
14.00
14.00
14.00
14.00
14.00
-3.70
-3.70
-3.70
-3.70
-3.70
2000q3
10.08
10.08
10.08
10.08
10.08
13.85
13.85
13.85
13.85
13.85
-3.94
-3.94
-3.94
-3.94
-3.94
2000q4
6.53
6.53
6.53
6.53
6.53
11.17
11.17
11.17
11.17
11.17
-4.09
-4.09
-4.09
-4.09
-4.09
2001q1
3.42
3.42
3.42
3.42
3.42
5.95
5.95
5.95
5.95
5.95
-3.90
-3.90
-3.90
-3.90
-3.90
2001q2
-2.87
-2.87
-2.87
-2.87
-2.87
-1.41
-1.41
-1.41
-1.41
-1.41
-3.52
-3.52
-3.52
-3.52
-3.52
2001q3
-9.94
-9.94
-9.94
-9.94
-9.94
-7.16
-7.16
-7.16
-7.16
-7.16
-3.56
-3.56
-3.56
-3.56
-3.56
2001q4
-11.86
-11.86
-11.86
-11.86
-11.86
-7.59
-7.59
-7.59
-7.59
-7.59
-3.44
-3.44
-3.44
-3.44
-3.44
2002q1
-9.52
-9.52
-9.52
-9.52
-9.52
-4.10
-4.10
-4.10
-4.10
-4.10
-3.63
-3.63
-3.63
-3.63
-3.63
2002q2
-4.02
-4.02
-4.02
-4.02
-4.02
2.15
2.15
2.15
2.15
2.15
-3.99
-3.99
-3.99
-3.99
-3.99
2002q3
1.64
1.64
1.64
1.64
1.64
6.42
6.42
6.42
6.42
6.42
-4.10
-4.10
-4.10
-4.10
-4.10
2002q4
3.76
3.76
3.76
3.76
3.76
9.70
9.70
9.70
9.70
9.70
-4.46
-4.46
-4.46
-4.46
-4.46
2003q1
1.06
1.06
1.06
1.06
1.06
5.33
5.33
5.33
5.33
5.33
-4.66
-4.66
-4.66
-4.66
-4.66
2003q2
-1.86
-1.86
-1.86
-1.86
-1.86
3.32
3.32
3.32
3.32
3.32
-4.57
-4.57
-4.57
-4.57
-4.57
2003q3
0.10
0.10
0.10
0.10
0.10
2.85
2.85
2.85
2.85
2.85
-4.45
-4.45
-4.45
-4.45
-4.45
2003q4
5.77
5.77
5.77
5.77
5.77
4.80
4.80
4.80
4.80
4.80
-4.46
-4.46
-4.46
-4.46
-4.46
2004q1
9.82
9.82
9.82
9.82
9.82
9.29
9.29
9.29
9.29
9.29
-4.77
-4.77
-4.77
-4.77
-4.77
2004q2
12.05
12.05
12.05
12.05
12.05
12.09
12.09
12.09
12.09
12.09
-5.19
-5.19
-5.19
-5.19
-5.19
2004q3
9.92
9.92
9.92
9.92
9.92
12.39
12.39
12.39
12.39
12.39
-5.32
-5.32
-5.32
-5.32
-5.32
2004q4
7.39
7.39
7.39
7.39
7.39
11.47
11.47
11.47
11.47
11.47
-5.65
-5.65
-5.65
-5.65
-5.65
2005q1
6.41
6.41
6.41
6.41
6.41
8.84
8.84
8.84
8.84
8.84
-5.48
-5.48
-5.48
-5.48
-5.48
2005q2
7.14
7.14
7.14
7.14
7.14
5.26
5.26
5.26
5.26
5.26
-5.54
-5.54
-5.54
-5.54
-5.54
2005q3
6.88
6.88
6.88
6.88
6.88
4.56
4.56
4.56
4.56
4.56
-5.76
-5.76
-5.76
-5.76
-5.76
2005q4
7.02
7.02
7.02
7.02
7.02
5.11
5.11
5.11
5.11
5.11
-6.17
-6.17
-6.17
-6.17
-6.17
2006q1
8.37
8.37
8.37
8.37
8.37
6.34
6.34
6.34
6.34
6.34
-5.85
-5.85
-5.85
-5.85
-5.85
2006q2
7.43
7.43
7.43
7.43
7.43
6.37
6.37
6.37
6.37
6.37
-5.86
-5.86
-5.86
-5.86
-5.86
2006q3
8.37
8.37
8.37
8.37
8.37
7.22
7.22
7.22
7.22
7.22
-6.01
-6.01
-6.01
-6.01
-6.01
2006q4
9.26
9.26
9.26
9.26
9.26
3.69
3.69
3.69
3.69
3.69
-5.28
-5.28
-5.28
-5.28
-5.28
2007q1
6.62
6.62
6.62
6.62
6.62
2.94
2.94
2.94
2.94
2.94
-5.27
-5.27
-5.27
-5.27
-5.27
2007q2
7.07
7.07
7.07
7.07
7.07
2.00
2.00
2.00
2.00
2.00
-5.21
-5.21
-5.21
-5.21
-5.21
2007q3
10.30
10.30
10.30
10.30
10.30
1.75
1.75
1.75
1.75
1.75
-4.94
-4.94
-4.94
-4.94
-4.94
2007q4
8.35
8.35
8.35
8.35
8.35
1.02
1.02
1.02
1.02
1.02
-5.05
-5.05
-5.05
-5.05
-5.05
2008q1
9.54
9.54
9.54
9.56
9.54
0.59
0.59
0.59
0.58
0.59
-4.96
-4.96
-5.00
-4.97
-4.96
2008q2
8.50
8.50
8.50
8.55
8.50
0.70
0.70
0.68
0.67
0.70
-4.80
-4.80
-4.86
-4.80
-4.80
2008q3
4.94
4.94
4.93
5.04
4.94
-0.14
-0.14
-0.18
-0.19
-0.14
-4.66
-4.66
-4.75
-4.66
-4.66
2008q4
4.47
4.47
4.46
4.64
4.47
1.28
1.28
1.27
1.20
1.28
-4.67
-4.67
-4.80
-4.65
-4.67
2009q1
4.38
4.38
4.37
4.62
4.38
2.34
2.34
2.33
2.23
2.34
-4.71
-4.71
-4.88
-4.69
-4.71
2009q2
4.82
4.82
4.80
5.14
4.82
3.58
3.58
3.53
3.45
3.58
-4.54
-4.54
-4.73
-4.50
-4.54
2009q3
5.08
5.08
5.05
5.47
5.08
3.92
3.92
3.83
3.77
3.92
-4.38
-4.38
-4.59
-4.33
-4.38
2009q4
5.23
5.23
5.21
5.71
5.23
4.87
4.87
4.82
4.71
4.87
-4.50
-4.50
-4.75
-4.42
-4.50
2010q1
5.91
5.80
5.88
6.44
6.04
5.93
6.05
5.90
5.77
5.93
-4.61
-4.63
-4.91
-4.51
-4.59
2010q2
5.91
5.70
5.88
6.51
6.17
6.21
6.52
6.15
6.04
6.21
-4.51
-4.57
-4.82
-4.39
-4.47
2010q3
5.86
5.54
5.83
6.51
6.25
6.43
6.94
6.32
6.26
6.43
-4.39
-4.50
-4.72
-4.25
-4.34
2010q4
5.81
5.38
5.78
6.49
6.33
7.05
7.75
6.97
6.88
7.05
-4.60
-4.74
-4.98
-4.43
-4.53
2011q1
4.86
4.44
4.83
5.56
5.38
6.46
7.22
6.41
6.29
6.46
-4.73
-4.92
-5.17
-4.54
-4.65
2011q2
4.58
4.17
4.55
5.30
5.10
6.21
6.98
6.13
6.04
6.21
-4.63
-4.85
-5.08
-4.42
-4.53
2011q3
4.36
3.95
4.33
5.08
4.88
6.01
6.78
5.89
5.84
6.01
-4.51
-4.78
-4.97
-4.27
-4.40
2011q4
4.18
3.77
4.15
4.89
4.69
5.72
6.49
5.65
5.55
5.72
-4.70
-5.01
-5.22
-4.44
-4.57
2012q1
4.19
3.78
4.16
4.90
4.71
5.62
6.38
5.57
5.45
5.62
-4.82
-5.16
-5.40
-4.53
-4.67
2012q2
4.21
3.80
4.18
4.92
4.73
5.63
6.39
5.53
5.45
5.63
-4.71
-5.10
-5.29
-4.40
-4.55
2012q3
4.23
3.82
4.20
4.94
4.75
5.67
6.45
5.54
5.50
5.67
-4.60
-5.03
-5.18
-4.26
-4.41
2012q4
4.25
3.84
4.22
4.96
4.77
5.65
6.42
5.56
5.48
5.65
-4.78
-5.25
-5.44
-4.42
-4.58
2013q1
4.27
3.86
4.24
4.98
4.79
5.64
6.41
5.57
5.47
5.64
-4.90
-5.40
-5.61
-4.50
-4.68
2013q2
4.29
3.88
4.26
5.00
4.81
5.65
6.42
5.53
5.48
5.65
-4.79
-5.34
-5.50
-4.37
-4.55
2013q3
4.30
3.89
4.27
5.02
4.82
5.70
6.48
5.55
5.53
5.70
-4.67
-5.27
-5.38
-4.23
-4.42
2013q4
4.32
3.91
4.29
5.03
4.84
5.68
6.45
5.57
5.51
5.68
-4.86
-5.49
-5.65
-4.38
-4.58
2014q1
4.33
3.93
4.30
5.05
4.85
5.67
6.44
5.57
5.49
5.67
-4.97
-5.64
-5.82
-4.46
-4.67
2014q2
4.35
3.94
4.32
5.06
4.87
5.68
6.46
5.54
5.51
5.68
-4.85
-5.57
-5.70
-4.32
-4.54
2014q3
4.36
3.95
4.33
5.07
4.88
5.72
6.51
5.55
5.55
5.72
-4.74
-5.51
-5.58
-4.19
-4.41
2014q4
4.37
3.97
4.34
5.08
4.90
5.71
6.49
5.57
5.53
5.71
-4.92
-5.73
-5.85
-4.34
-4.57
2015q1
4.39
3.98
4.35
5.10
4.91
5.69
6.47
5.57
5.52
5.69
-5.03
-5.88
-6.03
-4.41
-4.66
2015q2
4.40
3.99
4.37
5.11
4.92
5.71
6.49
5.54
5.53
5.71
-4.91
-5.81
-5.90
-4.27
-4.52
2015q3
4.41
4.00
4.37
5.12
4.93
5.75
6.54
5.55
5.58
5.75
-4.81
-5.75
-5.77
-4.14
-4.40
2015q4
4.41
4.01
4.38
5.12
4.94
5.73
6.52
5.57
5.56
5.73
-4.98
-5.97
-6.05
-4.28
-4.55
2016q1
4.42
4.02
4.39
5.13
4.95
5.72
6.50
5.57
5.54
5.72
-5.09
-6.12
-6.24
-4.36
-4.64
2016q2
4.43
4.03
4.40
5.14
4.95
5.73
6.52
5.54
5.56
5.73
-4.97
-6.05
-6.09
-4.21
-4.50
2016q3
4.44
4.04
4.41
5.15
4.96
5.77
6.57
5.55
5.60
5.77
-4.87
-6.00
-5.96
-4.08
-4.38
2016q4
4.44
4.04
4.41
5.15
4.97
5.76
6.55
5.57
5.58
5.76
-5.04
-6.21
-6.26
-4.22
-4.53
2017q1
4.45
4.05
4.42
5.16
4.98
5.74
6.53
5.58
5.57
5.74
-5.14
-6.36
-6.44
-4.29
-4.61
2017q2
4.46
4.06
4.43
5.16
4.98
5.76
6.55
5.54
5.58
5.76
-5.03
-6.29
-6.29
-4.15
-4.47
2017q3
4.46
4.06
4.43
5.17
4.99
5.80
6.60
5.56
5.62
5.80
-4.93
-6.25
-6.16
-4.02
-4.36
2017q4
4.47
4.07
4.44
5.17
4.99
5.78
6.57
5.57
5.60
5.78
-5.10
-6.46
-6.46
-4.16
-4.51
2018q1
4.47
4.07
4.44
5.18
5.00
5.77
6.56
5.58
5.59
5.77
-5.20
-6.61
-6.65
-4.23
-4.58
2018q2
4.48
4.08
4.44
5.18
5.00
5.78
6.58
5.55
5.61
5.78
-5.09
-6.55
-6.48
-4.08
-4.44
2018q3
4.48
4.08
4.45
5.19
5.00
5.82
6.62
5.56
5.65
5.82
-4.99
-6.51
-6.35
-3.95
-4.33
2018q4
4.48
4.08
4.45
5.19
5.01
5.80
6.60
5.57
5.63
5.80
-5.16
-6.72
-6.66
-4.09
-4.48
2019q1
4.49
4.09
4.45
5.19
5.01
5.79
6.59
5.58
5.61
5.79
-5.26
-6.86
-6.86
-4.15
-4.55
2019q2
4.49
4.09
4.46
5.19
5.02
5.81
6.61
5.55
5.63
5.81
-5.14
-6.80
-6.68
-4.00
-4.41
2019q3
4.49
4.09
4.46
5.20
5.02
5.85
6.65
5.56
5.67
5.85
-5.05
-6.77
-6.55
-3.88
-4.30
2019q4
4.49
4.10
4.46
5.20
5.02
5.83
6.63
5.57
5.65
5.83
-5.22
-6.98
-6.87
-4.02
-4.44
2020q1
4.50
4.10
4.46
5.20
5.02
5.81
6.62
5.57
5.64
5.81
-5.32
-7.12
-7.06
-4.08
-4.51
2020q2
4.50
4.10
4.47
5.20
5.03
5.83
6.64
5.55
5.65
5.83
-5.20
-7.07
-6.88
-3.93
-4.37
2020q3
4.50
4.11
4.47
5.20
5.03
5.87
6.68
5.56
5.69
5.87
-5.12
-7.04
-6.75
-3.81
-4.27
2020q4
4.50
4.11
4.47
5.21
5.03
5.85
6.65
5.57
5.67
5.85
-5.28
-7.25
-7.08
-3.94
-4.41

Data for Exhibit 3 (continued)

Quarter
Nominal Trade Balance excl Oil: Baseline
Nominal Trade Balance excl Oil: U.S. Growth = Foreign Growth
Nominal Trade Balance excl Oil: Oil Prices Rise
Nominal Trade Balance excl Oil: Dollar Falls & Higher Interest Rates
Nominal Trade Balance excl Oil: Higher Foreign Growth
Current Account Balance: Baseline
Current Account Balance: U.S. Growth = Foreign Growth
Current Account Balance: Oil Prices Rise
Current Account Balance: Dollar Falls & Higher Interest Rates
Current Account Balance: Higher Foreign Growth
NIIP/GDP: Baseline
NIIP/GDP: U.S. Growth = Foreign Growth
NIIP/GDP: Oil Prices Rise
NIIP/GDP: Dollar Falls & Higher Interest Rates
NIIP/GDP: Higher Foreign Growth
Net Investment Income: Baseline
Net Investment Income: U.S. Growth = Foreign Growth
Net Investment Income: Oil Prices Rise
Net Investment Income: Dollar Falls & Higher Interest Rates
Net Investment Income: Higher Foreign Growth
2000q1
-2.520
-2.520
-2.520
-2.520
-2.520
-4.110
-4.110
-4.110
-4.110
-4.110
-8.250
-8.250
-8.250
-8.250
-8.250
0.220
0.220
0.220
0.220
0.220
2000q2
-2.560
-2.560
-2.560
-2.560
-2.560
-4.060
-4.060
-4.060
-4.060
-4.060
-9.830
-9.830
-9.830
-9.830
-9.830
0.240
0.240
0.240
0.240
0.240
2000q3
-2.720
-2.720
-2.720
-2.720
-2.720
-4.390
-4.390
-4.390
-4.390
-4.390
-12.050
-12.050
-12.050
-12.050
-12.050
0.180
0.180
0.180
0.180
0.180
2000q4
-2.770
-2.770
-2.770
-2.770
-2.770
-4.450
-4.450
-4.450
-4.450
-4.450
-13.880
-13.880
-13.880
-13.880
-13.880
0.420
0.420
0.420
0.420
0.420
2001q1
-2.650
-2.650
-2.650
-2.650
-2.650
-4.290
-4.290
-4.290
-4.290
-4.290
-15.640
-15.640
-15.640
-15.640
-15.640
0.270
0.270
0.270
0.270
0.270
2001q2
-2.450
-2.450
-2.450
-2.450
-2.450
-3.850
-3.850
-3.850
-3.850
-3.850
-17.060
-17.060
-17.060
-17.060
-17.060
0.340
0.340
0.340
0.340
0.340
2001q3
-2.600
-2.600
-2.600
-2.600
-2.600
-3.610
-3.610
-3.610
-3.610
-3.610
-17.790
-17.790
-17.790
-17.790
-17.790
0.110
0.110
0.110
0.110
0.110
2001q4
-2.630
-2.630
-2.630
-2.630
-2.630
-3.450
-3.450
-3.450
-3.450
-3.450
-18.770
-18.770
-18.770
-18.770
-18.770
0.730
0.730
0.730
0.730
0.730
2002q1
-2.840
-2.840
-2.840
-2.840
-2.840
-4.040
-4.040
-4.040
-4.040
-4.040
-19.340
-19.340
-19.340
-19.340
-19.340
0.340
0.340
0.340
0.340
0.340
2002q2
-2.990
-2.990
-2.990
-2.990
-2.990
-4.440
-4.440
-4.440
-4.440
-4.440
-19.060
-19.060
-19.060
-19.060
-19.060
0.170
0.170
0.170
0.170
0.170
2002q3
-3.090
-3.090
-3.090
-3.090
-3.090
-4.410
-4.410
-4.410
-4.410
-4.410
-19.630
-19.630
-19.630
-19.630
-19.630
0.300
0.300
0.300
0.300
0.300
2002q4
-3.310
-3.310
-3.310
-3.310
-3.310
-4.660
-4.660
-4.660
-4.660
-4.660
-19.710
-19.710
-19.710
-19.710
-19.710
0.460
0.460
0.460
0.460
0.460
2003q1
-3.330
-3.330
-3.330
-3.330
-3.330
-5.050
-5.050
-5.050
-5.050
-5.050
-19.890
-19.890
-19.890
-19.890
-19.890
0.320
0.320
0.320
0.320
0.320
2003q2
-3.400
-3.400
-3.400
-3.400
-3.400
-4.800
-4.800
-4.800
-4.800
-4.800
-18.810
-18.810
-18.810
-18.810
-18.810
0.440
0.440
0.440
0.440
0.440
2003q3
-3.270
-3.270
-3.270
-3.270
-3.270
-4.710
-4.710
-4.710
-4.710
-4.710
-18.690
-18.690
-18.690
-18.690
-18.690
0.430
0.430
0.430
0.430
0.430
2003q4
-3.280
-3.280
-3.280
-3.280
-3.280
-4.510
-4.510
-4.510
-4.510
-4.510
-19.080
-19.080
-19.080
-19.080
-19.080
0.660
0.660
0.660
0.660
0.660
2004q1
-3.360
-3.360
-3.360
-3.360
-3.360
-4.910
-4.910
-4.910
-4.910
-4.910
-19.060
-19.060
-19.060
-19.060
-19.060
0.720
0.720
0.720
0.720
0.720
2004q2
-3.750
-3.750
-3.750
-3.750
-3.750
-5.470
-5.470
-5.470
-5.470
-5.470
-19.840
-19.840
-19.840
-19.840
-19.840
0.510
0.510
0.510
0.510
0.510
2004q3
-3.810
-3.810
-3.810
-3.810
-3.810
-5.370
-5.370
-5.370
-5.370
-5.370
-19.540
-19.540
-19.540
-19.540
-19.540
0.590
0.590
0.590
0.590
0.590
2004q4
-3.840
-3.840
-3.840
-3.840
-3.840
-6.140
-6.140
-6.140
-6.140
-6.140
-19.200
-19.200
-19.200
-19.200
-19.200
0.330
0.330
0.330
0.330
0.330
2005q1
-3.720
-3.720
-3.720
-3.720
-3.720
-6.000
-6.000
-6.000
-6.000
-6.000
-18.770
-18.770
-18.770
-18.770
-18.770
0.460
0.460
0.460
0.460
0.460
2005q2
-3.670
-3.670
-3.670
-3.670
-3.670
-5.950
-5.950
-5.950
-5.950
-5.950
-17.830
-17.830
-17.830
-17.830
-17.830
0.430
0.430
0.430
0.430
0.430
2005q3
-3.650
-3.650
-3.650
-3.650
-3.650
-5.520
-5.520
-5.520
-5.520
-5.520
-17.410
-17.410
-17.410
-17.410
-17.410
0.580
0.580
0.580
0.580
0.580
2005q4
-3.840
-3.840
-3.840
-3.840
-3.840
-6.790
-6.790
-6.790
-6.790
-6.790
-17.620
-17.620
-17.620
-17.620
-17.620
0.280
0.280
0.280
0.280
0.280
2006q1
-3.590
-3.590
-3.590
-3.590
-3.590
-6.190
-6.190
-6.190
-6.190
-6.190
-17.570
-17.570
-17.570
-17.570
-17.570
0.370
0.370
0.370
0.370
0.370
2006q2
-3.460
-3.460
-3.460
-3.460
-3.460
-6.250
-6.250
-6.250
-6.250
-6.250
-17.210
-17.210
-17.210
-17.210
-17.210
0.370
0.370
0.370
0.370
0.370
2006q3
-3.510
-3.510
-3.510
-3.510
-3.510
-6.550
-6.550
-6.550
-6.550
-6.550
-18.200
-18.200
-18.200
-18.200
-18.200
0.230
0.230
0.230
0.230
0.230
2006q4
-3.270
-3.270
-3.270
-3.270
-3.270
-5.610
-5.610
-5.610
-5.610
-5.610
-18.960
-18.960
-18.960
-18.960
-18.960
0.340
0.340
0.340
0.340
0.340
2007q1
-3.180
-3.180
-3.180
-3.180
-3.180
-5.850
-5.850
-5.850
-5.850
-5.850
-18.380
-18.380
-18.380
-18.380
-18.380
0.270
0.270
0.270
0.270
0.270
2007q2
-2.940
-2.940
-2.940
-2.940
-2.940
-5.520
-5.520
-5.520
-5.520
-5.520
-14.460
-14.460
-14.460
-14.460
-14.460
0.420
0.420
0.420
0.420
0.420
2007q3
-2.590
-2.590
-2.590
-2.590
-2.590
-5.090
-5.090
-5.090
-5.090
-5.090
-13.910
-13.910
-13.910
-13.910
-13.910
0.630
0.630
0.630
0.630
0.630
2007q4
-2.220
-2.220
-2.220
-2.220
-2.220
-5.430
-5.430
-5.430
-5.430
-5.430
-17.870
-17.870
-17.870
-17.850
-17.870
0.480
0.480
0.480
0.480
0.480
2008q1
-1.970
-1.970
-1.970
-1.970
-1.970
-5.430
-5.430
-5.460
-5.420
-5.430
-18.770
-18.770
-18.770
-18.720
-18.770
0.340
0.340
0.340
0.350
0.340
2008q2
-2.060
-2.060
-2.060
-2.060
-2.060
-5.320
-5.320
-5.370
-5.290
-5.320
-19.880
-19.880
-19.900
-19.790
-19.880
0.270
0.270
0.290
0.300
0.270
2008q3
-2.080
-2.080
-2.080
-2.080
-2.080
-5.200
-5.200
-5.270
-5.180
-5.200
-21.030
-21.030
-21.070
-20.910
-21.030
0.250
0.250
0.270
0.270
0.250
2008q4
-1.980
-1.980
-1.970
-1.970
-1.980
-5.190
-5.190
-5.300
-5.210
-5.190
-22.100
-22.100
-22.160
-21.950
-22.100
0.250
0.250
0.280
0.220
0.250
2009q1
-1.970
-1.970
-1.960
-1.940
-1.970
-5.180
-5.180
-5.310
-5.230
-5.180
-22.990
-22.990
-23.090
-22.830
-22.990
0.260
0.260
0.290
0.180
0.260
2009q2
-1.950
-1.950
-1.950
-1.920
-1.950
-4.980
-4.980
-5.130
-5.070
-4.980
-23.950
-23.950
-24.090
-23.780
-23.950
0.270
0.270
0.310
0.140
0.270
2009q3
-1.950
-1.950
-1.950
-1.900
-1.950
-4.810
-4.810
-4.980
-4.930
-4.810
-24.940
-24.940
-25.120
-24.760
-24.940
0.280
0.280
0.320
0.100
0.280
2009q4
-1.930
-1.930
-1.920
-1.850
-1.930
-4.970
-4.970
-5.170
-5.100
-4.970
-25.870
-25.870
-26.090
-25.690
-25.870
0.280
0.280
0.330
0.070
0.280
2010q1
-1.950
-1.980
-1.940
-1.850
-1.930
-5.040
-5.070
-5.280
-5.180
-5.020
-26.660
-26.630
-26.940
-26.480
-26.650
0.260
0.260
0.320
0.030
0.260
2010q2
-1.990
-2.060
-1.980
-1.870
-1.960
-4.940
-5.010
-5.200
-5.080
-4.910
-27.530
-27.490
-27.870
-27.360
-27.520
0.250
0.250
0.310
-0.010
0.250
2010q3
-2.030
-2.150
-2.030
-1.890
-1.990
-4.840
-4.950
-5.100
-4.980
-4.780
-28.440
-28.390
-28.840
-28.270
-28.410
0.230
0.220
0.300
-0.050
0.240
2010q4
-2.090
-2.240
-2.080
-1.920
-2.020
-5.070
-5.220
-5.380
-5.190
-4.990
-29.310
-29.260
-29.790
-29.140
-29.260
0.200
0.190
0.270
-0.090
0.210
2011q1
-2.130
-2.330
-2.120
-1.940
-2.050
-5.230
-5.420
-5.580
-5.340
-5.120
-30.160
-30.130
-30.720
-29.980
-30.090
0.170
0.160
0.250
-0.130
0.190
2011q2
-2.170
-2.410
-2.160
-1.950
-2.070
-5.150
-5.380
-5.510
-5.240
-5.020
-31.090
-31.080
-31.740
-30.900
-30.990
0.140
0.120
0.230
-0.170
0.170
2011q3
-2.200
-2.490
-2.190
-1.960
-2.090
-5.050
-5.330
-5.410
-5.130
-4.900
-32.060
-32.080
-32.790
-31.850
-31.920
0.110
0.090
0.210
-0.210
0.150
2011q4
-2.240
-2.560
-2.220
-1.970
-2.100
-5.260
-5.580
-5.680
-5.320
-5.080
-32.990
-33.050
-33.820
-32.760
-32.810
0.090
0.060
0.190
-0.240
0.130
2012q1
-2.270
-2.640
-2.250
-1.980
-2.120
-5.390
-5.760
-5.860
-5.430
-5.190
-33.850
-33.960
-34.780
-33.590
-33.610
0.070
0.030
0.170
-0.270
0.110
2012q2
-2.300
-2.710
-2.280
-1.980
-2.130
-5.300
-5.710
-5.760
-5.320
-5.070
-34.780
-34.950
-35.820
-34.490
-34.490
0.050
0.010
0.160
-0.290
0.100
2012q3
-2.330
-2.790
-2.310
-1.990
-2.140
-5.200
-5.660
-5.650
-5.200
-4.950
-35.740
-35.990
-36.880
-35.420
-35.390
0.020
-0.020
0.140
-0.320
0.090
2012q4
-2.360
-2.860
-2.340
-1.990
-2.160
-5.400
-5.900
-5.920
-5.380
-5.120
-36.670
-36.990
-37.930
-36.300
-36.250
0.000
-0.050
0.130
-0.350
0.070
2013q1
-2.390
-2.940
-2.370
-1.990
-2.170
-5.520
-6.070
-6.100
-5.480
-5.220
-37.520
-37.940
-38.920
-37.100
-37.030
-0.020
-0.070
0.120
-0.370
0.060
2013q2
-2.420
-3.010
-2.400
-2.000
-2.180
-5.420
-6.020
-6.000
-5.360
-5.100
-38.450
-38.960
-39.970
-37.970
-37.880
-0.030
-0.100
0.110
-0.390
0.050
2013q3
-2.450
-3.080
-2.430
-2.000
-2.190
-5.320
-5.980
-5.880
-5.230
-4.970
-39.400
-40.020
-41.040
-38.860
-38.750
-0.050
-0.120
0.090
-0.410
0.040
2013q4
-2.470
-3.160
-2.450
-2.000
-2.200
-5.520
-6.220
-6.160
-5.400
-5.140
-40.320
-41.060
-42.100
-39.720
-39.570
-0.070
-0.150
0.080
-0.430
0.030
2014q1
-2.500
-3.230
-2.480
-2.000
-2.210
-5.640
-6.390
-6.340
-5.500
-5.230
-41.160
-42.040
-43.100
-40.490
-40.330
-0.090
-0.180
0.070
-0.450
0.030
2014q2
-2.530
-3.300
-2.510
-2.000
-2.220
-5.540
-6.340
-6.220
-5.370
-5.100
-42.070
-43.100
-44.160
-41.320
-41.130
-0.110
-0.200
0.060
-0.470
0.020
2014q3
-2.560
-3.380
-2.530
-2.000
-2.220
-5.440
-6.300
-6.100
-5.250
-4.970
-43.010
-44.190
-45.250
-42.180
-41.960
-0.120
-0.230
0.050
-0.490
0.010
2014q4
-2.580
-3.450
-2.560
-2.000
-2.230
-5.630
-6.540
-6.380
-5.410
-5.140
-43.920
-45.260
-46.320
-42.990
-42.760
-0.140
-0.260
0.040
-0.510
0.000
2015q1
-2.610
-3.520
-2.590
-2.000
-2.240
-5.750
-6.700
-6.560
-5.500
-5.220
-44.760
-46.270
-47.340
-43.730
-43.480
-0.160
-0.280
0.030
-0.530
-0.010
2015q2
-2.640
-3.600
-2.610
-1.990
-2.250
-5.640
-6.660
-6.430
-5.370
-5.090
-45.660
-47.360
-48.400
-44.530
-44.250
-0.180
-0.310
0.020
-0.540
-0.010
2015q3
-2.660
-3.670
-2.640
-1.990
-2.250
-5.550
-6.620
-6.310
-5.240
-4.960
-46.590
-48.480
-49.490
-45.340
-45.040
-0.200
-0.340
0.010
-0.560
-0.020
2015q4
-2.690
-3.740
-2.660
-1.990
-2.260
-5.740
-6.860
-6.600
-5.400
-5.120
-47.490
-49.580
-50.570
-46.120
-45.800
-0.210
-0.370
0.000
-0.580
-0.030
2016q1
-2.710
-3.820
-2.690
-1.980
-2.260
-5.850
-7.030
-6.780
-5.480
-5.200
-48.320
-50.630
-51.600
-46.820
-46.480
-0.230
-0.400
-0.010
-0.590
-0.030
2016q2
-2.740
-3.890
-2.710
-1.980
-2.270
-5.750
-6.990
-6.640
-5.350
-5.070
-49.210
-51.750
-52.680
-47.580
-47.210
-0.250
-0.430
-0.020
-0.610
-0.040
2016q3
-2.770
-3.970
-2.740
-1.980
-2.280
-5.660
-6.960
-6.520
-5.220
-4.950
-50.120
-52.900
-53.770
-48.350
-47.970
-0.260
-0.460
-0.030
-0.620
-0.040
2016q4
-2.790
-4.040
-2.760
-1.970
-2.280
-5.840
-7.200
-6.810
-5.380
-5.100
-51.000
-54.030
-54.860
-49.080
-48.680
-0.280
-0.490
-0.040
-0.640
-0.050
2017q1
-2.820
-4.120
-2.790
-1.970
-2.280
-5.950
-7.370
-7.000
-5.450
-5.170
-51.830
-55.120
-55.900
-49.750
-49.340
-0.300
-0.520
-0.050
-0.650
-0.050
2017q2
-2.840
-4.190
-2.810
-1.960
-2.290
-5.850
-7.330
-6.850
-5.310
-5.040
-52.700
-56.270
-56.990
-50.460
-50.030
-0.310
-0.550
-0.060
-0.660
-0.050
2017q3
-2.870
-4.270
-2.840
-1.960
-2.290
-5.760
-7.310
-6.720
-5.190
-4.920
-53.600
-57.450
-58.080
-51.190
-50.740
-0.330
-0.580
-0.070
-0.670
-0.060
2017q4
-2.890
-4.340
-2.860
-1.950
-2.300
-5.940
-7.550
-7.030
-5.340
-5.060
-54.480
-58.620
-59.180
-51.880
-51.420
-0.350
-0.610
-0.070
-0.680
-0.060
2018q1
-2.920
-4.420
-2.890
-1.940
-2.300
-6.050
-7.720
-7.220
-5.410
-5.140
-55.290
-59.750
-60.230
-52.510
-52.040
-0.360
-0.640
-0.080
-0.690
-0.060
2018q2
-2.950
-4.500
-2.910
-1.940
-2.300
-5.950
-7.680
-7.060
-5.270
-4.990
-56.160
-60.930
-61.320
-53.180
-52.690
-0.380
-0.670
-0.090
-0.700
-0.060
2018q3
-2.970
-4.570
-2.940
-1.930
-2.310
-5.870
-7.670
-6.930
-5.150
-4.880
-57.040
-62.140
-62.420
-53.860
-53.360
-0.390
-0.710
-0.100
-0.710
-0.070
2018q4
-3.000
-4.650
-2.960
-1.920
-2.310
-6.050
-7.910
-7.240
-5.290
-5.020
-57.910
-63.350
-63.520
-54.510
-54.000
-0.410
-0.740
-0.100
-0.720
-0.070
2019q1
-3.020
-4.730
-2.980
-1.920
-2.310
-6.150
-8.080
-7.430
-5.350
-5.090
-58.710
-64.510
-64.590
-55.090
-54.580
-0.420
-0.770
-0.110
-0.730
-0.070
2019q2
-3.050
-4.810
-3.010
-1.910
-2.320
-6.050
-8.050
-7.260
-5.200
-4.940
-59.570
-65.730
-65.680
-55.710
-55.190
-0.440
-0.800
-0.120
-0.740
-0.070
2019q3
-3.070
-4.890
-3.030
-1.900
-2.320
-5.970
-8.040
-7.130
-5.080
-4.830
-60.440
-66.990
-66.780
-56.350
-55.820
-0.450
-0.840
-0.120
-0.740
-0.070
2019q4
-3.100
-4.960
-3.060
-1.890
-2.320
-6.150
-8.280
-7.450
-5.220
-4.960
-61.290
-68.230
-67.890
-56.950
-56.420
-0.470
-0.870
-0.130
-0.750
-0.070
2020q1
-3.130
-5.040
-3.080
-1.890
-2.320
-6.250
-8.450
-7.650
-5.280
-5.030
-62.090
-69.430
-68.960
-57.490
-56.960
-0.480
-0.910
-0.130
-0.750
-0.070
2020q2
-3.150
-5.120
-3.110
-1.880
-2.320
-6.140
-8.430
-7.460
-5.130
-4.880
-62.930
-70.690
-70.060
-58.070
-57.530
-0.500
-0.940
-0.140
-0.760
-0.060
2020q3
-3.180
-5.200
-3.130
-1.870
-2.330
-6.070
-8.430
-7.330
-5.010
-4.770
-63.790
-71.980
-71.160
-58.650
-58.120
-0.510
-0.980
-0.140
-0.760
-0.060
2020q4
-3.200
-5.280
-3.160
-1.860
-2.330
-6.240
-8.670
-7.660
-5.140
-4.900
-64.630
-73.260
-72.270
-59.210
-58.670
-0.530
-1.010
-0.150
-0.770
-0.060

Exhibit 4:  Ex Post Historical Simulation

Data for Exhibit 4 immediately follows

Data for Exhibit 4 below.

Data for Exhibit 4

Dates
Real Exchange Rate: History
Real Exchange Rate: Model begins in 1995
Foreign GDP: History
Foreign GDP: Model begins in 1995
U.S. GDP: History
U.S. GDP: Model begins in 1995
Oil Import Price: History
Oil Import Price: Model begins in 1995
U.S. Short Term Interest Rate: History
U.S. Short Term Interest Rate: Model begins in 1995
U.S. Long Term Interest Rate: History
U.S. Long Term Interest Rate: Model begins in 1995
Net Position: History
Net Position: Model begins in 1995
Receipts: History
Receipts: Model begins in 1995
1990q1
92.53
92.53
3.59
3.59
2.80
2.80
19.47
19.47
7.76
7.76
8.42
8.42
9.36
9.36
11.96
11.96
1990q2
93.14
93.14
3.72
3.72
2.40
2.40
15.89
15.89
7.75
7.75
8.68
8.68
8.96
8.96
11.77
11.77
1990q3
89.64
89.64
3.52
3.52
1.68
1.68
19.89
19.89
7.48
7.48
8.70
8.70
9.42
9.42
11.02
11.02
1990q4
87.00
87.00
3.00
3.00
0.65
0.65
28.81
28.81
6.99
6.99
8.40
8.40
5.84
5.84
11.01
11.01
1991q1
87.86
87.86
2.84
2.84
-1.00
-1.00
20.18
20.18
6.02
6.02
8.02
8.02
9.34
9.34
10.73
10.73
1991q2
90.95
90.95
2.86
2.86
-0.61
-0.61
17.29
17.29
5.56
5.56
8.13
8.13
9.61
9.61
9.60
9.60
1991q3
90.33
90.33
2.82
2.82
-0.14
-0.14
16.79
16.79
5.38
5.38
7.94
7.94
9.20
9.20
8.99
8.99
1991q4
87.44
87.44
3.30
3.30
1.09
1.09
18.04
18.04
4.54
4.54
7.35
7.35
8.62
8.62
9.04
9.04
1992q1
87.90
87.90
2.98
2.98
2.66
2.66
15.26
15.26
3.89
3.89
7.30
7.30
7.96
7.96
9.15
9.15
1992q2
87.82
87.82
2.73
2.73
2.98
2.98
17.38
17.38
3.68
3.68
7.38
7.38
6.34
6.34
9.57
9.57
1992q3
85.08
85.08
2.71
2.71
3.49
3.49
18.53
18.53
3.08
3.08
6.62
6.62
5.47
5.47
8.37
8.37
1992q4
88.45
88.45
2.20
2.20
4.15
4.15
17.91
17.91
3.07
3.07
6.74
6.74
4.42
4.42
7.58
7.58
1993q1
89.93
89.93
2.30
2.30
3.20
3.20
16.43
16.43
2.96
2.96
6.28
6.28
5.76
5.76
9.76
9.76
1993q2
87.79
87.79
2.40
2.40
2.73
2.73
17.07
17.07
2.97
2.97
5.99
5.99
5.95
5.95
9.87
9.87
1993q3
87.93
87.93
2.69
2.69
2.26
2.26
15.22
15.22
3.00
3.00
5.62
5.62
6.21
6.21
9.92
9.92
1993q4
88.49
88.49
3.07
3.07
2.51
2.51
14.09
14.09
3.06
3.06
5.61
5.61
8.11
8.11
9.76
9.76
1994q1
90.45
90.45
3.63
3.63
3.42
3.42
12.67
12.67
3.24
3.24
6.07
6.07
7.47
7.47
9.84
9.84
1994q2
89.55
89.55
4.20
4.20
4.24
4.24
14.69
14.69
3.99
3.99
7.08
7.08
7.44
7.44
9.99
9.99
1994q3
87.16
87.16
4.62
4.62
4.29
4.29
16.09
16.09
4.48
4.48
7.33
7.33
8.94
8.94
10.97
10.97
1994q4
86.29
86.29
5.03
5.03
4.11
4.11
15.18
15.18
5.28
5.28
7.84
7.84
8.77
8.77
11.06
11.06
1995q1
88.18
88.18
4.10
4.10
3.35
3.35
16.02
16.02
5.74
5.74
7.48
7.48
8.08
8.59
11.48
10.99
1995q2
83.93
83.93
3.09
3.09
2.20
2.20
17.55
17.55
5.60
5.60
6.62
6.62
8.25
8.15
12.47
10.81
1995q3
84.97
84.97
2.56
2.56
2.46
2.46
15.93
15.93
5.37
5.37
6.32
6.32
8.47
8.81
11.89
10.61
1995q4
86.53
86.53
2.19
2.19
2.02
2.02
16.00
16.00
5.26
5.26
5.89
5.89
7.20
8.24
12.04
10.45
1996q1
87.74
87.74
2.79
2.79
2.45
2.45
17.46
17.46
4.93
4.93
5.91
5.91
6.24
8.86
11.25
10.49
1996q2
87.97
87.97
3.42
3.42
3.94
3.94
19.43
19.43
5.02
5.02
6.72
6.72
7.08
9.33
10.78
10.52
1996q3
87.73
87.73
3.70
3.70
3.97
3.97
19.49
19.49
5.10
5.10
6.78
6.78
7.46
9.67
10.86
10.58
1996q4
88.22
88.22
4.09
4.09
4.42
4.42
22.22
22.22
4.98
4.98
6.34
6.34
7.91
9.51
11.67
10.71
1997q1
90.62
90.62
4.05
4.05
4.49
4.49
21.29
21.29
5.06
5.06
6.56
6.56
7.99
9.38
11.49
10.59
1997q2
91.14
91.14
4.62
4.62
4.37
4.37
17.96
17.96
5.05
5.05
6.70
6.70
7.78
9.51
11.80
10.72
1997q3
92.50
92.50
4.50
4.50
4.79
4.79
17.59
17.59
5.05
5.05
6.24
6.24
7.95
9.17
11.63
10.72
1997q4
96.08
96.08
4.07
4.07
4.34
4.34
17.72
17.72
5.09
5.09
5.91
5.91
7.42
9.13
10.19
10.71
1998q1
100.17
100.17
3.17
3.17
4.69
4.69
13.96
13.96
5.05
5.05
5.59
5.59
6.00
8.12
10.27
10.46
1998q2
100.04
100.04
2.00
2.00
3.80
3.80
12.55
12.55
4.98
4.98
5.60
5.60
5.50
8.17
9.86
10.22
1998q3
102.46
102.46
1.64
1.64
3.71
3.71
11.64
11.64
4.82
4.82
5.20
5.20
5.27
7.95
8.13
10.17
1998q4
98.50
98.50
1.53
1.53
4.51
4.51
11.45
11.45
4.25
4.25
4.67
4.67
5.51
8.02
8.79
10.01
1999q1
99.27
99.27
2.51
2.51
4.24
4.24
10.39
10.39
4.41
4.41
4.98
4.98
5.86
8.22
9.77
9.98
1999q2
100.23
100.23
3.51
3.51
4.42
4.42
14.73
14.73
4.45
4.45
5.54
5.54
5.29
8.32
10.14
10.22
1999q3
99.92
99.92
4.19
4.19
4.43
4.43
18.64
18.64
4.65
4.65
5.88
5.88
6.24
7.96
10.48
10.61
1999q4
98.86
98.86
5.08
5.08
4.70
4.70
22.09
22.09
5.04
5.04
6.14
6.14
7.29
7.92
10.67
10.93
2000q1
100.00
100.00
5.81
5.81
4.08
4.08
26.08
26.08
5.52
5.52
6.48
6.48
7.04
7.40
10.49
11.27
2000q2
102.46
102.46
5.68
5.68
4.85
4.85
26.19
26.19
5.71
5.71
6.18
6.18
7.22
7.13
10.59
11.35
2000q3
103.71
103.71
5.39
5.39
3.52
3.52
28.60
28.60
6.02
6.02
5.89
5.89
7.29
6.96
9.84
11.43
2000q4
106.41
106.41
4.18
4.18
2.24
2.24
28.93
28.93
6.02
6.02
5.57
5.57
6.21
6.60
10.78
11.48
2001q1
107.40
107.40
2.74
2.74
1.86
1.86
25.15
25.15
4.82
4.82
5.05
5.05
6.08
6.64
8.91
11.14
2001q2
109.58
109.58
1.61
1.61
0.59
0.59
24.21
24.21
3.66
3.66
5.27
5.27
5.53
6.97
8.58
10.90
2001q3
109.17
109.17
0.43
0.43
0.35
0.35
23.51
23.51
3.17
3.17
4.98
4.98
5.14
7.02
7.76
10.56
2001q4
109.59
109.59
0.37
0.37
0.23
0.23
18.39
18.39
1.91
1.91
4.77
4.77
4.09
7.20
7.39
10.16
2002q1
111.17
111.17
0.94
0.94
1.03
1.03
18.37
18.37
1.72
1.72
5.08
5.08
3.66
7.10
8.04
10.10
2002q2
109.44
109.44
1.99
1.99
1.27
1.27
24.05
24.05
1.72
1.72
5.10
5.10
3.67
6.89
8.35
10.44
2002q3
107.49
107.49
2.97
2.97
2.22
2.22
25.53
25.53
1.64
1.64
4.26
4.26
3.20
6.49
8.59
10.36
2002q4
108.30
108.30
3.10
3.10
1.87
1.87
25.75
25.75
1.33
1.33
4.01
4.01
3.10
5.97
8.17
10.26
2003q1
106.16
106.16
2.41
2.41
1.49
1.49
30.73
30.73
1.16
1.16
3.92
3.92
2.78
5.50
8.98
10.19
2003q2
102.21
102.21
1.77
1.77
1.81
1.81
26.42
26.42
1.04
1.04
3.62
3.62
2.66
5.06
9.35
9.97
2003q3
102.49
102.49
2.11
2.11
3.05
3.05
28.04
28.04
0.93
0.93
4.23
4.23
2.71
4.97
9.46
10.03
2003q4
99.20
99.20
3.02
3.02
3.68
3.68
27.74
27.74
0.92
0.92
4.29
4.29
2.68
4.82
10.77
10.30
2004q1
97.53
97.53
3.93
3.93
4.12
4.12
30.92
30.92
0.92
0.92
4.02
4.02
2.66
4.54
11.19
10.39
2004q2
99.80
99.80
4.55
4.55
4.13
4.13
34.55
34.55
1.08
1.08
4.60
4.60
2.81
4.54
11.11
10.47
2004q3
98.96
98.96
4.27
4.27
3.17
3.17
37.56
37.56
1.49
1.49
4.30
4.30
2.82
4.37
11.08
10.57
2004q4
95.69
95.69
3.84
3.84
3.15
3.15
40.91
40.91
2.01
2.01
4.17
4.17
3.70
4.27
10.74
10.71
2005q1
94.75
94.75
3.31
3.31
3.17
3.17
39.90
39.90
2.54
2.54
4.30
4.30
3.01
4.14
10.25
10.41
2005q2
95.96
95.96
3.32
3.32
3.01
3.01
46.28
46.28
2.86
2.86
4.16
4.16
3.37
4.03
10.44
10.66
2005q3
96.99
96.99
3.70
3.70
3.22
3.22
55.29
55.29
3.36
3.36
4.21
4.21
3.76
4.04
10.83
11.03
2005q4
98.08
98.08
3.88
3.88
2.88
2.88
55.39
55.39
3.83
3.83
4.49
4.49
4.07
4.11
11.15
11.02
2006q1
96.61
96.61
4.49
4.49
3.31
3.31
55.09
55.09
4.39
4.39
4.57
4.57
4.36
4.10
11.57
11.14
2006q2
95.42
95.42
4.54
4.54
3.22
3.22
63.81
63.81
4.70
4.70
5.07
5.07
4.59
4.26
11.89
11.49
2006q3
95.36
95.36
4.07
4.07
2.37
2.37
66.57
66.57
4.91
4.91
4.90
4.90
4.63
4.45
11.53
11.48
2006q4
93.96
93.96
3.99
3.99
2.60
2.60
55.33
55.33
4.90
4.90
4.63
4.63
4.76
4.57
11.66
11.23
2007q1
93.91
93.91
3.88
3.88
1.55
1.55
54.39
54.39
4.98
4.98
4.68
4.68
4.91
4.70
11.13
11.27
2007q2
92.03
92.03
4.00
4.00
1.89
1.89
63.84
63.84
4.74
4.74
4.85
4.85
4.51
4.85
11.76
11.59
2007q3
90.16
90.16
4.36
4.36
2.84
2.84
70.31
70.31
4.30
4.30
4.73
4.73
4.77
4.99
11.76
11.90
2007q4
87.18
87.18
4.16
4.16
2.42
2.42
80.34
80.34
3.39
3.39
4.26
4.26
5.86
5.17
11.89
12.11

Data for Exhibit 4 (continued)

Dates
Payments: History
Payments:Model begins in 1995
Real Exports: History
Real Exports: Model begins in 1995
Real Imports: History
Real Imports: Model begins in 1995
Nominal Trade Balance: History
Nominal Trade Balance: Model begins in 1995
Nominal Trade Balance excl Oil: History
Nominal Trade Balance excl Oil: Model begins in 1995
Current Account Balance: History
Current Account Balance: Model begins in 1995
NIIP/GDP: History
NIIP/GDP: Model begins in 1995
Net Investment Income: History
Net Investment Income: Model begins in 1995
1990q1
0.96
0.96
11.87
11.87
5.22
5.22
-1.61
-1.61
-0.40
-0.40
-1.65
-1.65
-4.62
-4.62
0.45
0.45
1990q2
0.91
0.91
8.55
8.55
4.82
4.82
-1.26
-1.26
-0.41
-0.41
-1.35
-1.35
-4.32
-4.32
0.48
0.48
1990q3
1.20
1.20
8.21
8.21
4.55
4.55
-1.33
-1.33
-0.33
-0.33
-1.47
-1.47
-4.07
-4.07
0.40
0.40
1990q4
-0.20
-0.20
7.54
7.54
-0.07
-0.07
-1.38
-1.38
-0.14
-0.14
-0.98
-0.98
-4.19
-4.19
0.79
0.79
1991q1
-0.68
-0.68
3.61
3.61
-4.25
-4.25
-0.88
-0.88
0.09
0.09
0.68
0.68
-4.49
-4.49
0.59
0.59
1991q2
-0.16
-0.16
6.06
6.06
-2.61
-2.61
-0.43
-0.43
0.42
0.42
0.17
0.17
-4.78
-4.78
0.40
0.40
1991q3
0.05
0.05
7.70
7.70
0.11
0.11
-0.37
-0.37
0.46
0.46
-0.28
-0.28
-4.75
-4.75
0.34
0.34
1991q4
-0.97
-0.97
9.08
9.08
4.61
4.61
-0.41
-0.41
0.40
0.40
-0.35
-0.35
-5.07
-5.07
0.47
0.47
1992q1
-0.51
-0.51
10.43
10.43
7.75
7.75
-0.35
-0.35
0.40
0.40
-0.40
-0.40
-5.71
-5.71
0.47
0.47
1992q2
0.92
0.92
6.57
6.57
7.40
7.40
-0.63
-0.63
0.17
0.17
-0.76
-0.76
-5.96
-5.96
0.45
0.45
1992q3
0.78
0.78
6.32
6.32
6.12
6.12
-0.68
-0.68
0.18
0.18
-0.83
-0.83
-6.22
-6.22
0.39
0.39
1992q4
0.45
0.45
4.50
4.50
6.59
6.59
-0.81
-0.81
0.04
0.04
-1.16
-1.16
-6.65
-6.65
0.41
0.41
1993q1
0.02
0.02
2.89
2.89
8.09
8.09
-0.87
-0.87
-0.01
-0.01
-0.90
-0.90
-6.01
-6.01
0.52
0.52
1993q2
1.73
1.73
4.05
4.05
8.36
8.36
-1.07
-1.07
-0.24
-0.24
-1.25
-1.25
-5.40
-5.40
0.42
0.42
1993q3
1.15
1.15
1.59
1.59
8.23
8.23
-1.14
-1.14
-0.42
-0.42
-1.28
-1.28
-4.89
-4.89
0.50
0.50
1993q4
2.74
2.74
4.37
4.37
10.26
10.26
-1.14
-1.14
-0.44
-0.44
-1.65
-1.65
-4.51
-4.51
0.27
0.27
1994q1
2.57
2.57
5.14
5.14
10.23
10.23
-1.27
-1.27
-0.61
-0.61
-1.45
-1.45
-4.74
-4.74
0.37
0.37
1994q2
3.31
3.31
7.36
7.36
11.78
11.78
-1.37
-1.37
-0.67
-0.67
-1.63
-1.63
-4.35
-4.35
0.30
0.30
1994q3
4.25
4.25
11.65
11.65
13.46
13.46
-1.43
-1.43
-0.60
-0.60
-1.78
-1.78
-4.52
-4.52
0.27
0.27
1994q4
4.70
4.70
10.54
10.54
12.21
12.21
-1.51
-1.51
-0.79
-0.79
-2.02
-2.02
-4.47
-4.47
0.25
0.25
1995q1
4.49
4.45
11.55
11.53
12.05
11.14
-1.53
-1.41
-0.74
-0.62
-1.72
-1.68
-5.34
-4.43
0.38
0.30
1995q2
4.48
4.19
9.49
9.83
9.08
8.79
-1.60
-1.43
-0.82
-0.66
-1.75
-1.65
-5.74
-4.09
0.41
0.33
1995q3
5.57
4.16
10.20
8.59
6.46
8.27
-1.09
-1.31
-0.35
-0.57
-1.45
-1.59
-6.67
-4.69
0.21
0.30
1995q4
4.47
4.11
9.40
8.60
4.95
8.35
-1.00
-1.27
-0.27
-0.54
-1.23
-1.59
-6.09
-4.27
0.36
0.27
1996q1
4.30
4.05
8.78
8.98
5.75
9.15
-1.24
-1.30
-0.40
-0.47
-1.44
-1.68
-5.79
-3.97
0.44
0.26
1996q2
4.57
4.34
9.10
8.71
7.40
10.76
-1.31
-1.47
-0.40
-0.56
-1.53
-1.78
-5.73
-4.05
0.32
0.23
1996q3
4.98
4.34
5.38
7.81
10.56
10.96
-1.56
-1.59
-0.63
-0.66
-1.83
-1.91
-5.99
-4.38
0.27
0.22
1996q4
4.91
4.47
10.28
8.23
11.01
11.05
-1.22
-1.78
-0.18
-0.74
-1.57
-2.24
-6.19
-4.69
0.33
0.22
1997q1
5.96
4.44
10.93
8.15
12.44
12.31
-1.45
-1.89
-0.42
-0.86
-1.78
-2.22
-5.83
-4.89
0.21
0.21
1997q2
5.92
4.70
13.43
8.83
13.54
12.50
-1.15
-1.80
-0.32
-0.98
-1.40
-2.17
-6.23
-5.35
0.30
0.18
1997q3
6.50
4.85
15.15
8.39
13.95
13.41
-1.20
-1.95
-0.40
-1.15
-1.56
-2.34
-7.27
-5.88
0.20
0.17
1997q4
5.21
4.82
8.29
5.95
14.30
12.51
-1.42
-2.12
-0.61
-1.31
-2.04
-2.70
-9.69
-7.18
0.11
0.15
1998q1
4.42
4.90
6.82
3.38
13.71
12.00
-1.64
-2.33
-0.96
-1.65
-2.05
-2.83
-9.83
-6.91
0.20
0.11
1998q2
4.96
4.81
1.62
0.83
12.30
10.73
-1.91
-2.48
-1.32
-1.88
-2.37
-2.99
-10.18
-6.89
0.16
0.11
1998q3
4.42
4.92
-1.16
0.07
9.68
9.47
-2.04
-2.61
-1.50
-2.07
-2.68
-3.14
-10.14
-6.66
0.01
0.12
1998q4
4.85
5.16
2.65
0.83
11.02
10.96
-2.00
-2.84
-1.48
-2.32
-2.72
-3.49
-10.00
-6.78
0.03
0.11
1999q1
4.64
5.14
1.32
2.45
9.82
11.21
-2.37
-3.08
-1.87
-2.58
-2.79
-3.57
-9.44
-7.05
0.16
0.09
1999q2
5.71
5.11
3.58
4.46
10.70
11.86
-2.77
-3.35
-2.10
-2.68
-3.14
-3.84
-8.96
-7.58
0.21
0.10
1999q3
5.97
5.21
6.77
5.59
13.12
11.80
-3.07
-3.56
-2.25
-2.74
-3.47
-3.98
-7.85
-7.45
0.18
0.15
1999q4
5.31
5.54
5.60
6.34
12.13
10.54
-3.21
-3.80
-2.29
-2.87
-3.59
-4.27
-8.05
-8.40
0.27
0.19
2000q1
5.80
5.29
8.24
7.61
13.63
9.63
-3.74
-4.01
-2.52
-2.80
-4.11
-4.33
-8.25
-8.53
0.22
0.26
2000q2
5.52
5.56
10.16
8.11
14.00
10.11
-3.70
-4.02
-2.56
-2.88
-4.06
-4.35
-9.83
-9.71
0.24
0.27
2000q3
4.28
5.17
10.08
8.51
13.85
10.75
-3.94
-4.21
-2.72
-2.98
-4.39
-4.57
-12.05
-11.23
0.18
0.26
2000q4
3.52
5.03
6.53
6.52
11.17
8.62
-4.09
-4.31
-2.77
-2.99
-4.45
-4.87
-13.88
-12.26
0.42
0.22
2001q1
2.13
4.66
3.42
3.61
5.95
7.47
-3.90
-4.29
-2.65
-3.04
-4.29
-4.79
-15.64
-13.38
0.27
0.15
2001q2
1.12
4.47
-2.87
-0.57
-1.41
2.65
-3.52
-4.13
-2.45
-3.06
-3.85
-4.81
-17.06
-14.30
0.34
0.00
2001q3
1.88
4.02
-9.94
-3.86
-7.16
-1.02
-3.56
-4.09
-2.60
-3.13
-3.61
-4.33
-17.79
-14.57
0.11
-0.08
2001q4
-1.58
3.86
-11.86
-4.14
-7.59
0.12
-3.44
-4.05
-2.63
-3.23
-3.45
-4.94
-18.77
-15.56
0.73
-0.16
2002q1
2.07
3.83
-9.52
-3.13
-4.10
1.13
-3.63
-4.21
-2.84
-3.42
-4.04
-5.18
-19.34
-16.29
0.34
-0.21
2002q2
3.48
3.76
-4.02
0.04
2.15
3.65
-3.99
-4.51
-2.99
-3.52
-4.44
-5.29
-19.06
-16.47
0.17
-0.16
2002q3
3.77
3.69
1.64
2.34
6.42
5.57
-4.10
-4.58
-3.09
-3.57
-4.41
-5.26
-19.63
-17.71
0.30
-0.07
2002q4
2.16
3.43
3.76
2.74
9.70
5.69
-4.46
-4.77
-3.31
-3.62
-4.66
-5.45
-19.71
-18.70
0.46
-0.03
2003q1
4.70
3.28
1.06
2.28
5.33
3.20
-4.66
-4.95
-3.33
-3.62
-5.05
-5.62
-19.89
-19.46
0.32
0.04
2003q2
4.47
3.34
-1.86
2.27
3.32
3.60
-4.57
-4.89
-3.40
-3.73
-4.80
-5.50
-18.81
-19.10
0.44
0.07
2003q3
5.02
3.75
0.10
3.86
2.85
4.59
-4.45
-4.91
-3.27
-3.73
-4.71
-5.51
-18.69
-19.57
0.43
0.10
2003q4
5.07
3.73
5.77
6.88
4.80
5.19
-4.46
-4.82
-3.28
-3.63
-4.51
-5.36
-19.08
-20.40
0.66
0.16
2004q1
5.30
3.80
9.82
8.92
9.29
7.66
-4.77
-5.02
-3.36
-3.61
-4.91
-5.63
-19.06
-20.83
0.72
0.25
2004q2
6.72
3.91
12.05
9.44
12.09
6.93
-5.19
-4.95
-3.75
-3.52
-5.47
-5.50
-19.84
-21.74
0.51
0.24
2004q3
6.05
4.03
9.92
8.46
12.39
7.14
-5.32
-5.13
-3.81
-3.62
-5.37
-5.51
-19.54
-21.71
0.59
0.25
2004q4
6.34
4.06
7.39
7.20
11.47
7.21
-5.65
-5.36
-3.84
-3.55
-6.14
-5.85
-19.20
-21.80
0.33
0.33
2005q1
6.44
4.13
6.41
6.94
8.84
6.41
-5.48
-5.24
-3.72
-3.48
-6.00
-5.88
-18.77
-22.36
0.46
0.35
2005q2
6.40
4.17
7.14
7.44
5.26
5.28
-5.54
-5.24
-3.67
-3.37
-5.95
-5.69
-17.83
-22.63
0.43
0.39
2005q3
5.59
4.37
6.88
6.97
4.56
5.10
-5.76
-5.63
-3.65
-3.51
-5.52
-5.54
-17.41
-23.52
0.58
0.43
2005q4
7.74
4.27
7.02
7.18
5.11
5.87
-6.17
-5.87
-3.84
-3.54
-6.79
-6.37
-17.62
-24.77
0.28
0.40
2006q1
6.70
4.49
8.37
7.81
6.34
6.15
-5.85
-5.61
-3.59
-3.35
-6.19
-5.98
-17.57
-25.08
0.37
0.34
2006q2
6.86
4.49
7.43
7.15
6.37
6.77
-5.86
-5.72
-3.46
-3.32
-6.25
-6.12
-17.21
-24.89
0.37
0.37
2006q3
7.61
4.36
8.37
6.98
7.22
5.33
-6.01
-5.79
-3.51
-3.30
-6.55
-6.19
-18.20
-25.88
0.23
0.37
2006q4
6.60
4.33
9.26
6.13
3.69
2.31
-5.28
-5.22
-3.27
-3.20
-5.61
-5.62
-18.96
-26.64
0.34
0.27
2007q1
6.04
4.15
6.62
5.60
2.94
2.91
-5.27
-5.24
-3.18
-3.15
-5.85
-5.83
-18.38
-26.96
0.27
0.25
2007q2
6.93
4.28
7.07
5.43
2.00
2.19
-5.21
-5.39
-2.94
-3.12
-5.52
-5.84
-14.46
-26.88
0.42
0.27
2007q3
6.61
4.51
10.30
5.42
1.75
2.17
-4.94
-5.45
-2.59
-3.10
-5.09
-5.92
-13.91
-26.32
0.63
0.31
2007q4
6.82
4.32
8.35
5.87
1.02
3.04
-5.05
-5.75
-2.22
-2.92
-5.43
-6.21
-17.87
-27.02
0.48
0.39

Exhibit 5

Data for Exhibit 5 immediately follows

Data for Exhibit 5: NIIP as a Share of GDP, 2006

Country
NIIP/GDP
New Zealand
-95.9
Greece
-87.4
Portugal
-82.8
Australia
-61.4
Spain
-61.0
U.K.
-25.0
Sweden
-23.8
Austria
-23.3
U.S.
-19.3
Finland
-12.4
Canada
-7.2
Irealand
-6.7
Italy
-5.6
Netherlands
0.8
France
5.1
Germany
28.8
Belgium
35.5
Japan
41.4
Switzerland
119.7

Source:  IMF International Financial Statistics. Sweden data from 2005.

Data for Exhibit 5: Net Investment Income as a Share of GDP, 2006

Country
NII/GPD
Ireland
-13.84
New Zealand
-7.43
Australia
-3.95
Portugal
-3.37
Greece
-3.35
Spain
-2.12
Austria
-1.32
Italy
-0.90
Canada
-0.82
Finland
0.21
U.S.
0.33
Sweden
0.34
Norway
0.44
Belgium
0.61
France
0.70
Germany
1.05
Denmark
1.27
U.K.
1.46
Japan
2.71
Netherlands
3.32
Switzerland
11.80

Source:  IMF Balance of Payments Statistics.

Exhibit 5a

Data for Exhibit 5a immediately follows

Data for Exhibit 5a: NIIP as a Share of Exports, 2006

Country
NIIP/Exp
Greece
-418.6
New Zealand
-334.7
Austria
-303.7
Portugal
-262.7
Spain
-232.4
U.S.
-175.7
U.K.
-88.2
Sweden
-43.8
Austria
-41.8
Finland
-27.7
Italy
-20.0
Canada
-19.9
Ireland
-8.4
Netherlands
1.2
France
19.0
Belgium
41.4
Germany
64.2
Switzerland
211.8
Japan
246.6

Source:  IMF International Financial Statistics. Sweden data from 2005.

Data for Exhibit 5a: Net Investment Income as a Share of Exports, 2006

Country
NII/Exp
New Zealand
-25.94
Australia
-19.56
Ireland
-17.45
Greece
-16.06
Portugal
-10.70
Spain
-8.08
Italy
-3.24
Austria
-2.37
Canada
-2.26
Finland
0.47
Sweden
0.68
Belgium
0.71
Norway
0.94
Germany
2.34
Denmark
2.45
France
2.61
U.S.
2.99
Netherlands
4.74
U.K.
5.13
Japan
16.12
Switzerland
20.86

Source:  IMF Balance of Payments Statistics.

Exhibit 6:  NIIP/GDP vs Net Investment Income/GDP, 2006

Data for Exhibit 6 immediately follows

Data for Exhibit 6

Country
NII/GDP
NIIP/GDP
NZ
-7.43
-95.9
Gre
-3.35
-87.4
Por
-3.37
-82.8
Aus
-3.95
-61.4
Spa
-2.12
-61.0
U.K
1.46
-25.0
Swe
0.34
-23.8
Aut
-1.32
-23.3
U.S.
0.33
-19.3
Fin
0.21
-12.4
Can
-0.82
-7.2
Ire
-13.84
-6.7
Ita
-0.90
-5.6
Net
3.32
1.0
Fra
0.70
5.1
Ger
1.05
28.8
Bel
0.61
35.5
Jap
2.71
41.0
Swi
11.80
120.0

Exhibit 7

Data for Exhibit 7 immediately follows

Data for Exhibit 7: NIIP as a Share of GDP at Year of Current Account Adjustment

Country
Year
NIIP/GDP
Fin
1991
-45.1
Aus
1989
-44.3
Can
1993
-43.4
Can
1981
-38.1
Swe
1992
-22.7
Swe
1982
-18.1
Aut
1999
-17.4
Spa
1991
-15.4
Nor
1986
-15.0
Aut
1980
-9.2
Ita
1992
-9.0
Spa
1981
-8.6
U.S.
1987
1.1
Ita
1981
4.0
UK
1989
10.0

Source:  IMF International Financial Statistics.

Data for Exhibit 7: NII as a Share of GDP at Year of Current Account Adjustment

Country
Year
NII/GDP
NZ
1984
-10.30
Por
1982
-5.47
Ire
1981
-5.18
Can
1981
-4.78
Den
1986
-4.09
Fin
1991
-3.81
Swe
1992
-3.74
Can
1993
-3.69
Aus
1989
-3.53
Gre
1985
-2.72
Gre
1990
-1.93
Ita
1992
-1.77
Swe
1982
-1.64
Aut
1999
-1.63
Nor
1986
-1.48
Spa
1981
-1.20
Spa
1991
-0.82
Ita
1981
-0.79
Aut
1980
-0.66
UK
1989
-0.12
Fra
1982
0.20
U.S.
1987
0.33

Source:  IMF Balance of Payments Statistics.

Exhibit 7a

Data for Exhibit 7a immediately follows

Data for Exhibit 7a: NIIP as a Share of GDP

Country
Year
NIIP: CA Adjustment
Average
Fin
1991
-45.09
-18.86
Aus
1989
-44.32
-43.42
Can
1993
-43.37
-36.97
Can
1981
-38.07
-32.26
Swe
1992
-22.71
-20.91
Swe
1982
-18.14
--
Aut
1999
-17.39
-7.09
Spa
1991
-15.38
-9.47
Nor
1986
-14.98
-19.09
Aut
1980
-9.20
--
Ita
1992
-8.96
-3.47
Spa
1981
-8.55
--
U.S.
1987
1.07
6.71
Ita
1981
3.96
1.41
UK
1989
9.97
16.28

Source:  IMF International Financial Statistics.

Data for Exhibit 7a: NII as a Share of GDP

Country
Year
NII: CA Adjustment
Average
NZ
1984
-10.30
-2.50
Por
1982
-5.47
-1.79
Ire
1981
-5.18
-2.60
Can
1981
-4.78
-2.34
Den
1986
-4.09
-2.60
Fin
1991
-3.81
-1.99
Swe
1992
-3.74
-1.57
Can
1993
-3.69
-3.49
Aus
1989
-3.53
-1.71
Gre
1985
-2.72
-1.00
Gre
1990
-1.93
-2.42
Ita
1992
-1.77
-1.04
Swe
1982
-1.64
-0.45
Aut
1999
-1.63
-0.72
Nor
1986
-1.48
-2.48
Spa
1981
-1.20
-0.53
Spa
1991
-0.82
-1.09
Ita
1981
-0.79
-0.26
Aut
1980
-0.66
-0.46
UK
1989
-0.12
0.81
Fra
1982
0.20
0.32
U.S.
1987
0.33
0.84

Source:  IMF Balance of Payments Statistics.

Exhibit 8:  Shares in World Market Capitalization

Data for Exhibit 8 immediately follows

Data for Exhibit 8

Year
U.S. Equities
US Bonds
1993
36.64
--
1994
33.52
39.23
1995
38.55
38.58
1996
41.89
39.69
1997
48.92
42.20
1998
49.96
41.60
1999
46.06
42.13
2000
46.89
43.52
2001
49.65
45.42
2002
47.21
43.05
2003
44.31
40.14
2004
42.57
38.07
2005
38.85
39.68
2006
35.84
39.08

Sources:  Share of U.S. Equities from S&P's Global Markets Factbook 2004. Share of U.S. Bonds from BIS data, adjusted for Brady bonds outstanding.

Exhibit 9

Data for Exhibit 9 immediately follows

Data for Exhibit 9: Share of U.S. and All External Equitites in Total Equity Portfolios of Foreign Investors

Year
U.S.
Foreign
1997
5.56
15.25
2001
8.10
21.38
2002
8.17
22.26
2003
8.11
22.39
2004
7.57
22.49
2005
7.33
22.81
2006
7.38
24.24

Data for Exhibit 9: Share of U.S. and All External Bonds in Total Bond Portfolios of Foreign Investors

Year
U.S.
Foreign
1997
5.85
23.20
2001
9.85
25.58
2002
9.19
25.12
2003
9.47
25.72
2004
9.57
26.56
2005
10.36
28.45
2006
11.23
30.62

Authors' estimates based on IMF Coordinated Portfolio Asset Surveys.

Exhibit 10:  Share of U.S. Securities in Foreign Investors' Portfolios of External Securities

Data for Exhibit 10 immediately follows

Authors' estimates based on IMF Coordinated Portfolio Asset Surveys.

Data for Exhibit 10

Year
Equities
Bonds
1997
36.45
25.20
2001
37.90
38.52
2002
36.72
36.57
2003
36.24
36.80
2004
33.68
36.02
2005
32.14
36.43
2006
30.43
36.68

Exhibit 11

Data for Exhibit 11 immediately follows

Data for Exhibit 11

Year
Equities: U.S.
Equities: Foreign
Bonds: U.S.
Bonds: Foreign
1997
0.108
0.164
0.139
0.269
2001
0.163
0.232
0.217
0.292
2002
0.173
0.241
0.213
0.290
2003
0.182
0.244
0.236
0.302
2004
0.181
0.247
0.251
0.313
2005
0.188
0.248
0.261
0.331
2006
0.206
0.273
0.287
0.358

Exhibit 12:  Projections of Foreign Holdings of U.S. Securities

Data for Exhibit 12 immediately follows

Data for Exhibit 12

Year
U.S. Market Capitalization: Baseline
U.S. Market Capitalization: Alternative
Foreign Holdings: Baseline
Foreign Holdings: Alternative
U.S. Securities (share): Baseline
U.S. Securities (share): Alternative
U.S. Securitites (weight): Baseline
U.S. Securitites (weight): Alternative
2004
0.42
0.42
0.17
0.17
0.12
0.12
0.27
0.27
2005
0.40
0.40
0.18
0.18
0.11
0.11
0.28
0.28
2006
0.39
0.39
0.19
0.19
0.12
0.12
0.30
0.30
2007
0.37
0.37
0.21
0.21
0.12
0.12
0.32
0.32
2008
0.36
0.37
0.24
0.24
0.13
0.13
0.36
0.36
2009
0.36
0.37
0.27
0.27
0.14
0.15
0.40
0.40
2010
0.36
0.37
0.29
0.29
0.15
0.16
0.43
0.43
2011
0.35
0.37
0.31
0.30
0.16
0.16
0.44
0.44
2012
0.35
0.37
0.32
0.31
0.16
0.17
0.45
0.46
2013
0.35
0.37
0.33
0.32
0.16
0.17
0.47
0.47
2014
0.34
0.37
0.35
0.33
0.17
0.18
0.48
0.49
2015
0.34
0.37
0.36
0.34
0.17
0.18
0.49
0.50
2016
0.34
0.37
0.37
0.35
0.17
0.18
0.50
0.51
2017
0.33
0.37
0.39
0.36
0.18
0.19
0.51
0.53
2018
0.33
0.37
0.40
0.37
0.18
0.19
0.53
0.54
2019
0.33
0.37
0.42
0.38
0.18
0.20
0.54
0.56
2020
0.32
0.37
0.43
0.39
0.18
0.20
0.55
0.57

Table 1:  Panel Regression for Interest Rates
Dependent Variable: 10-yr Nominal Government Bond Yields

Variable
(1)
(2)
(3)†
(4)†
(5)
(6)‡
(7)‡
(8)‡
(9)‡
(10)‡
10-yr. Int. Rate (-1)
0.426
0.578
0.587
0.564
0.559
0.596
0.395
0.596
0.371
0.573
10-yr. Int. Rate (-1): SE
0.041
0.059
0.058
0.060
0.062
0.064
0.048
0.063
0.047
0.066
10-yr. Int. Rate (-1): t-stat
10.32
9.89
10.09
9.36
9.06
9.37
8.20
9.47
7.87
8.74
10-yr. Int. Rate (-2)
0.157
0.064
0.056
0.057
0.060
0.069
0.176
0.071
0.167
0.060
10-yr. Int. Rate (-2: )SE
0.028
0.062
0.064
0.056
0.055
0.068
0.031
0.060
0.037
0.062
10-yr. Int. Rate (-2): t-stat
5.69
1.03
0.87
1.02
1.10
1.01
5.67
1.17
4.50
0.97
Money Market Int. Rate
0.246
0.198
0.194
0.204
0.211
0.195
0.238
0.170
0.265
0.206
Money Market Int. Rate: SE
0.025
0.030
0.029
0.033
0.036
0.032
0.024
0.033
0.025
0.036
Money Market Int. Rate: t-stat
9.82
6.64
6.82
6.12
5.87
6.12
9.90
5.19
10.72
5.69
Inflation
0.212
0.180
0.185
0.206
0.201
0.177
0.240
0.208
0.246
0.205
Inflation: SE
0.042
0.066
0.065
0.063
0.067
0.066
0.038
0.062
0.044
0.064
Inflation: t-stat
5.08
2.73
2.85
3.25
3.01
2.67
6.36
3.36
5.63
3.18
Real GDP Growth
0.077
0.060
0.064
0.071
0.066
0.049
0.089
0.045
0.110
0.057
Real GDP Growth: SE
0.027
0.024
0.026
0.026
0.026
0.026
0.033
0.025
0.040
0.029
Real GDP Growth: t-stat
2.88
2.54
2.47
2.72
2.49
1.89
2.72
1.78
2.76
1.94
Int. Rate Volatility
0.093
-0.486
-0.422
-0.392
-0.484
-0.483
0.166
-0.393
0.175
-0.436
Int. Rate Volatility: SE
0.408
0.289
0.288
0.308
0.296
0.324
0.480
0.326
0.526
0.319
Int. Rate Volatility: t-stat
0.23
-1.68
-1.47
-1.27
-1.64
-1.49
0.35
-1.21
0.33
-1.37
Fiscal Balance / GDP
-0.005
-0.025
-0.031
-0.022
-0.019
-0.025
-0.004
0.001
-0.035
-0.026
Fiscal Balance / GDP: SE
0.016
0.011
0.012
0.010
0.011
0.011
0.015
0.012
0.016
0.012
Fiscal Balance / GDP: t-stat
-0.34
-2.17
-2.61
-2.14
-1.71
-2.25
-0.25
0.09
-2.13
-2.23
NIIP / GDP (-1)
--
--
-0.002
--
--
--
-0.001
-0.001
-0.005
-0.004
NIIP / GDP (-1): SE
--
--
0.002
--
--
--
0.001
0.001
0.003
0.002
NIIP / GDP (-1): t-stat
--
--
-1.60
--
--
--
-1.25
-2.25
-1.90
-1.92
NIINCOME / GDP (-1)
--
--
--
-0.020
--
--
0.052
0.030
0.001
-0.016
NIINCOME / GDP (-1): SE
--
--
--
0.059
--
--
0.013
0.009
0.103
0.066
NIINCOME / GDP (-1): t-stat
--
--
--
-0.35
--
--
4.01
3.46
0.01
-0.25
CAB / GDP (-1)
--
--
--
--
0.008
--
-0.011
-0.001
-0.003
0.015
CAB / GDP (-1): SE
--
--
--
--
0.012
--
0.009
0.008
0.015
0.010
CAB / GDP (-1: )t-stat
--
--
--
--
0.61
--
-1.21
-0.17
-0.22
1.49
Ext. Liab. Variable (-1)
--
--
--
--
--
0.020
-0.004
-0.001
0.006
0.013
Ext. Liab. Variable (-1): SE
--
--
--
--
--
0.015
0.003
0.002
0.029
0.017
Ext. Liab. Variable (-1): t-stat
--
--
--
--
--
1.38
-1.43
-0.41
0.19
0.75
Euro
--
-0.072
-0.108
-0.119
-0.055
-0.125
0.000
-0.071
-0.061
-0.197
Euro: SE
--
0.137
0.128
0.154
0.120
0.145
0.081
0.090
0.146
0.163
Euro: t-stat
--
-0.53
-0.84
-0.77
-0.46
-0.86
0.00
-0.79
-0.42
-1.21
Constant
0.267
-0.332
-0.481
-0.113
-0.025
-0.455
0.307
-0.143
-0.020
-0.266
Constant: SE
0.130
1.058
1.064
0.952
0.937
1.028
0.150
0.711
0.433
0.916
Constant: t-stat
2.05
-0.31
-0.45
-0.12
-0.03
-0.44
2.05
-0.20
-0.05
-0.29
Time Fixed Effects
No
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
Country Fixed Effects
No
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
R2
0.938
0.967
0.969
0.970
0.968
0.970
0.945
0.969
0.948
0.970
SER
1.060
0.810
0.796
0.787
0.814
0.791
1.022
0.798
1.020
0.798
# Observations
541
541
532
518
511
474
438
438
438
438

Except as noted, countries included are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
†  Excludes Iceland.
‡  Excludes Canada, Iceland, and Italy.


Table 2:  Panel Regressions for Exchange Rates
Dependent Variable:  Real Effective Exchange Rate as Percent Deviation from Sample Mean
(Note: Means calculated by country.)
(Note: REER is home relative to foreign. An increase is an appreciation.)

Variable
(1)
(2)
(3)†
(4)†
(5)
(6)‡
(7)‡
(8)‡
(9)‡
(10)‡
REER Pct. Dev. (-1)
1.066
1.053
1.066
1.078
1.043
1.046
1.087
1.097
1.021
1.026
REER Pct. Dev. (-1): SE
0.035
0.035
0.031
0.039
0.036
0.026
0.044
0.037
0.044
0.032
REER Pct. Dev. (-1): t-stat
30.32
30.29
34.81
27.90
28.75
40.73
24.86
29.84
23.40
32.09
REER Pct. Dev. (-2)
-0.333
-0.321
-0.331
-0.330
-0.313
-0.317
-0.334
-0.327
-0.326
-0.311
REER Pct. Dev. (-2): SE
0.036
0.034
0.031
0.037
0.038
0.035
0.047
0.039
0.054
0.045
REER Pct. Dev. (-2): t-stat
-9.27
-9.37
-10.55
-8.83
-8.27
-9.13
-7.06
-8.29
-6.05
-6.91
Money Market Int. Rate
0.178
0.365
0.380
0.363
0.371
0.421
0.198
0.370
0.254
0.417
Money Market Int. Rate: SE
0.081
0.162
0.167
0.169
0.159
0.178
0.090
0.145
0.093
0.170
Money Market Int. Rate: t-stat
2.19
2.25
2.28
2.16
2.33
2.37
2.20
2.56
2.72
2.45
Inflation
-0.242
-0.453
-0.427
-0.359
-0.471
-0.440
-0.230
-0.308
-0.334
-0.426
Inflation: SE
0.051
0.136
0.131
0.150
0.146
0.131
0.086
0.131
0.098
0.143
Inflation: t-stat
-4.71
-3.33
-3.27
-2.40
-3.23
-3.36
-2.68
-2.34
-3.42
-2.97
Real GDP Growth
-0.173
-0.332
-0.344
-0.332
-0.337
-0.274
-0.111
-0.157
-0.167
-0.234
Real GDP Growth: SE
0.142
0.173
0.192
0.193
0.198
0.202
0.185
0.190
0.197
0.214
Real GDP Growth: t-stat
-1.22
-1.92
-1.80
-1.72
-1.70
-1.36
-0.60
-0.83
-0.85
-1.09
Int. Rate Volatility
-0.458
-0.937
-0.961
-0.557
-0.871
-1.314
-0.339
-0.244
-0.329
-0.692
Int. Rate Volatilit: SE
0.559
1.093
1.146
1.225
1.022
1.226
0.549
0.944
0.821
1.202
Int. Rate Volatilit: t-stat
-0.82
-0.86
-0.84
-0.45
-0.85
-1.07
-0.62
-0.26
-0.40
-0.58
Fiscal Balance / GDP
0.014
0.094
0.116
0.073
0.030
0.185
0.072
0.118
0.048
0.125
Fiscal Balance / GDP: SE
0.050
0.108
0.107
0.107
0.097
0.118
0.067
0.061
0.113
0.127
Fiscal Balance / GDP: t-stat
0.28
0.87
1.09
0.68
0.31
1.57
1.07
1.93
0.43
0.98
NIIP / GDP (-1)
--
--
0.016
--
--
--
0.013
0.017
0.011
0.013
NIIP / GDP (-1): SE
--
--
0.009
--
--
--
0.007
0.007
0.014
0.014
NIIP / GDP (-1): t-stat
--
--
1.76
--
--
--
1.81
2.66
0.78
0.96
NIINCOME / GDP (-1)
--
--
--
0.356
--
--
-0.052
-0.067
0.552
0.486
NIINCOME / GDP (-1)SE
--
--
--
0.200
--
--
0.083
0.087
0.275
0.261
NIINCOME / GDP (-1)t-stat
--
--
--
1.78
--
--
-0.62
-0.76
2.01
1.86
CAB / GDP (-1)
--
--
--
--
-0.002
--
-0.068
-0.077
-0.191
-0.166
CAB / GDP (-1): SE
--
--
--
--
0.103
--
0.080
0.092
0.115
0.138
CAB / GDP (-1): t-stat
--
--
--
--
-0.02
--
-0.86
-0.84
-1.66
-1.20
Ext. Liab. Variable (-1)
--
--
--
--
--
0.271
0.001
0.012
0.509
0.486
Ext. Liab. Variable (-1): SE
--
--
--
--
--
0.129
0.021
0.023
0.233
0.251
Ext. Liab. Variable (-1): t-stat
--
--
--
--
--
2.10
0.05
0.52
2.19
1.93
Euro
--
0.099
0.362
0.524
0.148
-0.486
0.632
0.294
-0.095
-0.138
Euro: SE
--
0.837
0.858
0.897
0.849
1.106
0.657
0.759
0.946
1.283
Euro: t-stat
--
0.12
0.42
0.58
0.17
-0.44
0.96
0.39
-0.10
-0.11
Constant
0.677
-0.598
-0.513
-0.755
-0.344
-2.039
0.310
-1.746
-0.668
-2.507
Constant: SE
0.673
2.090
2.146
2.377
2.268
2.452
0.754
1.218
1.426
2.664
Constant: t-stat
1.01
-0.29
-0.24
-0.32
-0.15
-0.83
0.41
-1.43
-0.47
-0.94
Time Fixed Effects
No
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
Country Fixed Effects
No
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
R2
0.7116
0.7705
0.7749
0.7864
0.7701
0.7741
0.7301
0.7771
0.7463
0.7901
SER
5.0163
4.7281
4.6858
4.5901
4.8073
4.6942
4.9430
4.6687
4.9065
4.6473
# Observations
497
497
488
480
473
434
404
404
404
404

Except as noted, countries included are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
†  Excludes Iceland.
‡  Excludes Canada, Iceland, and Italy.


Table 3:  Panel Regressions for Exchange Rates
Dependent Variable:  Real Effective Exchange Rate Percent Change
(Note: Means calculated by country.)
(Note: REER is home relative to foreign. An increase is an appreciation.)

Variable
(1)
(2)
(3)†
(4)†
(5)
(6)‡
(7)‡
(8)‡
(9)‡
(10)‡
REER Pct Change (-1)
0.185
0.185
0.205
0.207
0.165
0.206
0.201
0.214
0.180
0.179
REER Pct Change (-1): SE
0.048
0.037
0.031
0.038
0.040
0.037
0.062
0.044
0.064
0.044
REER Pct Change (-1): t-stat
3.82
4.93
6.58
5.43
4.11
5.52
3.22
4.86
2.83
4.09
REER Pct Change (-2)
-0.112
-0.131
-0.137
-0.138
-0.126
-0.162
-0.142
-0.150
-0.158
-0.172
REER Pct Change (-2): SE
0.026
0.030
0.030
0.031
0.032
0.029
0.026
0.028
0.030
0.033
REER Pct Change (-2): t-stat
-4.27
-4.35
-4.49
-4.49
-3.97
-5.57
-5.44
-5.38
-5.35
-5.28
Money Market Int. Rate
0.162
0.356
0.387
0.356
0.443
0.398
0.206
0.345
0.285
0.476
Money Market Int. Rate: SE
0.055
0.182
0.186
0.179
0.183
0.207
0.077
0.167
0.103
0.202
Money Market Int. Rate: t-stat
2.95
1.96
2.08
1.99
2.42
1.92
2.69
2.07
2.76
2.35
Inflation
-0.046
-0.331
-0.296
-0.237
-0.339
-0.312
-0.017
-0.155
-0.069
-0.313
Inflation: SE
0.086
0.128
0.126
0.122
0.129
0.128
0.068
0.083
0.106
0.130
Inflation: t-stat
-0.53
-2.59
-2.36
-1.95
-2.62
-2.44
-0.25
-1.87
-0.66
-2.41
Real GDP Growth
0.024
-0.084
-0.069
-0.052
-0.151
0.022
0.063
0.051
0.038
0.004
Real GDP Growth: SE
0.172
0.199
0.215
0.215
0.234
0.226
0.236
0.221
0.250
0.250
Real GDP Growth: t-stat
0.14
-0.42
-0.32
-0.24
-0.65
0.10
0.27
0.23
0.15
0.02
Int. Rate Volatility
-1.201
-0.972
-0.995
-0.380
-1.416
-0.851
-0.795
-0.221
-1.164
-0.734
Int. Rate Volatility: SE
0.633
1.082
1.143
1.044
1.171
1.297
0.405
0.769
0.644
1.213
Int. Rate Volatility: t-stat
-1.90
-0.90
-0.87
-0.36
-1.21
-0.66
-1.96
-0.29
-1.81
-0.60
Fiscal Balance / GDP
0.150
0.379
0.387
0.351
0.343
0.486
0.203
0.261
0.317
0.458
Fiscal Balance / GDP: SE
0.072
0.164
0.151
0.164
0.143
0.189
0.086
0.084
0.150
0.177
Fiscal Balance / GDP: t-stat
2.09
2.31
2.56
2.15
2.40
2.57
2.35
3.10
2.11
2.59
NIIP / GDP (-1)
--
--
0.007
--
--
--
0.000
0.006
0.001
0.006
NIIP / GDP (-1): SE
--
--
0.013
--
--
--
0.007
0.006
0.019
0.015
NIIP / GDP (-1): t-stat
--
--
0.51
--
--
--
0.07
1.03
0.05
0.44
NIINCOME / GDP (-1)
--
--
--
0.019
--
--
-0.032
-0.046
-0.056
-0.284
NIINCOME / GDP (-1): SE
--
--
--
0.242
--
--
0.060
0.070
0.250
0.240
NIINCOME / GDP (-1): t-stat
--
--
--
0.08
--
--
-0.54
-0.66
-0.22
-1.19
CAB / GDP (-1)
--
--
--
--
0.254
--
0.100
0.078
0.154
0.194
CAB / GDP (-1): SE
--
--
--
--
0.112
--
0.057
0.079
0.077
0.124
CAB / GDP (-1): t-stat
--
--
--
--
2.26
--
1.75
0.99
2.00
1.57
Ext. Liab. Variable (-1)
--
--
--
--
--
-0.065
0.012
0.023
0.178
0.186
Ext. Liab. Variable (-1): SE
--
--
--
--
--
0.058
0.019
0.022
0.139
0.179
Ext. Liab. Variable (-1): t-stat
--
--
--
--
--
-1.12
0.66
1.05
1.28
1.04
Euro
--
-0.255
-0.168
-0.272
0.500
-0.232
0.611
0.294
0.374
-0.226
Euro: SE
--
0.801
0.779
0.812
0.952
0.958
0.458
0.571
0.639
1.033
Euro: t-stat
--
-0.32
-0.22
-0.34
0.53
-0.24
1.33
0.52
0.59
-0.22
Constant
0.038
-4.118
-4.505
-5.150
-2.471
-4.973
-0.886
-4.995
-2.187
-5.132
Constant: SE
0.654
3.045
3.020
2.982
3.569
3.317
0.770
2.648
1.601
3.560
Constant: t-stat
0.06
-1.35
-1.49
-1.73
-0.69
-1.50
-1.15
-1.89
-1.37
-1.44
Time Fixed Effects
No
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
Country Fixed Effects
No
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
R2
0.0557
0.2750
0.2849
0.2987
0.2821
0.2839
0.0835
0.2758
0.1039
0.3038
SER
5.5589
5.1462
5.0894
4.8938
5.1916
5.0676
5.2979
4.8912
5.3659
4.9215
# Observations
488
488
479
471
464
427
397
397
397
397

Except as noted, countries included are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
†  Excludes Iceland.
‡  Excludes Canada, Iceland, and Italy.


Table 4:  Standard Determinants of Current Account / GDP

Variable
1
2
3
4
Per Capita GDP
0.003
0.005
0.010
0.011
Per Capita GDP: t-stat
3.200
3.806
4.475
4.628
ΔGrowth
0.032
0.066
-0.063
-0.010
Δgrowth: t-stat
0.396
1.043
-0.436
-0.102
Fiscal Balance
0.189
0.185
0.214
0.207
Fiscal Balance: t-stat
2.864
3.333
2.616
3.063
NFA
0.018
0.016
0.013
0.011
NFA: t-stat
2.765
2.603
2.526
2.713
Age Dependency Ratio
-0.025
-0.010
-0.068
-0.041
Age Dependency Ratio: t-stat
-1.954
-0.574
-3.233
-1.627
Oil Balance / GDP
0.158
0.156
0.165
0.168
Oil Balance / GDP: t-stat
3.130
3.038
2.452
2.367
Openness
0.012
0.006
0.010
0.000
Openness: t-stat
1.996
1.099
1.012
0.064
Governance Indicators
--
--
-0.018
-0.015
Governance Indicators: t-stat
--
--
-2.379
-2.133
U.S.(1997 - 2006)
--
-0.060
--
-0.077
U.S.(1997 - 2006): t-stat
--
-3.752
--
-4.174
Developing Asia (1997-2006)
--
0.047
--
0.047
Developing Asia (1997-2006): t-stat
--
4.666
--
8.520
#Obs
346
346
221
221
R2
0.313
0.364
0.372
0.445
SER
0.035
0.034
0.037
0.034

Panel regression with unreported constant and period fixed effects.
84 cross-sections and 5 periods.
t-statistic reported underneath coefficient.
Bold indicates significance at the 10 percent level.
Developing Asia includes China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Taiwan, and Thailand.

Footnotes

*  The authors are economists in the International Finance Division of the Federal Reserve Board. They can be reached at [email protected], [email protected] , and [email protected]. This paper has benefitted from comments by Trevor Reeve and participants at the Current Account Sustainability in Major Economies (II) conference at the University of Wisconsin, especially our discussant Jeffrey Frankel. The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Board of Governors of the Federal Reserve System or of any other person associated with the Federal Reserve System. Jim Albertus, Sean Fahle and Dao Nguyen provided excellent research assistance. Return to text

1.  See, among others, Edwards (2005), Eichengreen (2004), Mann (1999, 2002, 2003), Mussa (2004), Obstfeld and Rogoff (2004), Roubini and Setzer (2004), and Truman (2004). Return to text

2.  Freund (2005), Croke, Kamin, and Leduc (2006), Gagnon (2005), and Debelle and Galati (2005), among others, present evidence suggesting that current account corrections in industrial economies have generally been benign. Return to text

3.  This discussion leaves open the question of what level of the trade balance would be needed to achieve the level of the current account required to stabilize the NIIP/GDP ratio. One rule of thumb is that current account stability requires the trade balance to be equal to zero; then, the current account equals net income payments on the NIIP, the NIIP grows at the rate of interest, and, if GDP grows at the rate of interest as well, the NIIP/GDP ratio is stabilized. Return to text

4.  See, also, Xafa (2007). Return to text

5.  The theoretical basis for the Houthakker-Magee asymmetry remains ambiguous and the subject of controversy among trade modelers. Even so, the estimated coefficients in our trade models continue to exhibit the Houthakker-Magee asymmetry for goods trade. For services trade, in contrast, the income elasticity for exports exceeds that for imports. However, as goods trade exceeds services trade, the income elasticity for total imports exceeds that of total exports. Return to text

6.  A number of explanations have been advanced for the asymmetry of rates of return on direct investment, including greater efficiency of U.S. firms, better project selection by U.S. firms, younger and thus less mature investments for foreign firms in the United States, greater competitive pressures in the U.S. market, or differences in tax treatment. (See Higgins, Klitgaard, and Tille, 2005.) None of these factors seem likely to disappear in the near term. Return to text

7.  $ ^{ }$This is accomplished by starting out with trend extrapolations of gross inflows and outflows. If more financing is needed, gross inflows are adjusted up and outflows are adjusted down symmetrically; the reverse occurs if less financing is needed. Return to text

8.  $ ^{ }$This is BEA's preferred measure as it avoids many methodological issues associated with estimating the stock market value of non-traded equity positions. In addition, for our simulations, using the current cost measure means our estimates do not depend on our assumptions about future stock market movements. Return to text

9.  The saw-toothed pattern of the trade balance is caused by a residual seasonal pattern (even after seasonal adjustment by BEA) in oil imports. Return to text

10.  In fact, although our elasticities for individual trade components remain constant going forward, the income elasticity asymmetry for overall trade narrows in our projection. This is because the share of services in overall trade rises, and the income elasticity asymmetry for services trade (in contrast to goods trade) favors U.S. exports. Return to text

11.  $ ^{ }$Some may wonder why the United States, which is well known to have rates of return on external assets in excess of those on external liabilities, appears so unremarkable and close to the trend line in the scatterplot. The reason is simply that many of the industrial economies shown share this favorable rate-of-return asymmetry. Return to text

12.  $ ^{ }$Foreign investors held an estimated 57 percent of long-term marketable Treasury debt outstanding and over 21 percent of U.S. government agency debt outstanding. Return to text

13.  Mann (1999, 2002, and 2003) and Cline (2005), among others, also draw a distinction between creditworthiness- and exposure-based criteria for sustainability, and present calculations based on these concepts. Concerns about creditworthiness and exposure are not necessarily unrelated. In a portfolio balance model, investors allocate their wealth to different assets, based on expected returns and uncertainties about those returns. Therefore, the more creditworthy an asset is considered to be, the higher the share in wealth allocated to that asset. Return to text

14.  Balakrishnan, Bayoumi, and Tulin (2007) find that declining home bias and financial deepening account for most of the financing of the recent large U.S. current account deficits, rather than increases in the share of U.S. assets in foreign portfolios. Return to text

15.  Data on foreign holdings of U.S. and other external securities are derived from the IMF's Coordinated Portfolio Investment Surveys (CPIS). Because the CPIS captures non-reserve holdings only, we impute an amount for holdings of both U.S. and other external securities held as reserves using data from the IMF SEFER and COFER surveys. Most industrial countries and a number of emerging-market countries now participate in the CPIS. In terms of major holders of U.S. securities, they exclude investments held in some major custodial centers, by most Middle East oil exporters, and by China. Holdings of U.S. securities accounted for by CPIS countries in 2006 represent about 70 percent of total U.S. securities held by foreign investors. See Bertaut, Griever, and Tryon (2006) for a discussion of the methodology for imputing reserve holdings, and for a more complete discussion of the comparability between holdings of U.S. securities as measured by the CPIS and by U.S. liability surveys. Data on holdings of domestic securities are derived from national source financial balance sheet accounts where available, and otherwise from estimates of domestic equity and bond market capitalization. Return to text

16.  The 1997 and 2001 figures are not strictly comparable because more countries participated in the 2001 CPIS than in the 1997 CPIS. However, the difference in coverage is less critical for comparing relative shares than absolute holdings, and indeed the increase in shares held between the two years owes largely to the increases registered by countries that were participants in both years. Return to text

17.  See Bertaut and Griever (2004), for a fuller elaboration of this approach. Return to text

18.  In this analysis, we consider intra-euro area holdings of other euro-area country securities as domestic securities. Return to text

19.  Specifically, we assume that as foreigners acquire additional non-direct investment claims on the United States, the share of these claims that are securities (as opposed to bank deposits, trade credits, etc.) will mirror their current share in non-direct investment claims. Similarly, as U.S. residents acquire additional non-direct investment claims on foreigners, the share of these claims that are in the form of securities will mirror their current share. Return to text

20.  The starting figures for 2006-a 12 percent share of U.S. assets in total portfolios corresponding to a U.S. portfolio weight of about .28-are slightly larger than the shares and weights in exhibits 9-11 because for this exercise, we base total foreign holdings of U.S. securities on the more comprehensive liabilities estimates that underlie the NIIP calculations, and thus we are are able to include all foreign holdings of U.S. securities, including those held by countries not participating in the CPIS surveys, notably international financial centers, Middle East oil exporters, and China. Note also that the average shares and weights will more closely resemble the bond shares and weights in the exhibits because the majority of foreign holdings are in the form of U.S. bonds. Return to text

21.  We are not able to project how changes in foreigners' shares and weights held in total external securities compare with the projected changes in shares and weights held in U.S. securities. Although we are able to forecast total foreign (non-U.S.) market cap held by foreigner investors, we have no way of allocating what fraction of that foreign market cap reflects foreigner investors' home country securities and what fraction reflects holdings of other foreign securities. Return to text

22.  The specification is similar to that employed in Gruber and Kamin (2008), who, in turn, based their equation on that in Warnock and Warnock (2006). Return to text

23.  $ ^{ }$These regressions are estimated for the same 22 industrial countries over the sample 1978-2006. Return to text

24.  Gagnon (1996) finds evidence that net foreign assets scaled by trade flows are significantly associated with real exchange rates for a panel ending in 1995. In a multi-country probit study of industrial economies, Wright and Gagnon (2006) find that larger current account deficits are significantly associated with sharp real currency depreciations, but the magnitude of the effect is quite small. Other variables do not exert significant, robust effects on the probability of a sharp real depreciation. Return to text

25.  $ ^{ }$The data are averaged into periods of 4 or 5 years. The net foreign assets variable is measured as its value in the preceding period. Return to text

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