Stock Wealth Effect On The U.S.Current Account Deficit

In the wave of economic globalization,international capital flows not only play an important role in optimizing resource distribution and accelerating world economic growth,but also becomes a channel of crisis spread and of a country to release its domestic economic tension. At present,the huge current account deficit of the U.S. imperils the world economic and financial stability. The time when the U.S. large double deficits shaped up coincides with the outburst of capital economy in middle of 1990s and since then the prices of stock and house have been climbing in succession. Thus, in order to understand the trend and inherent contradiction of world economy,it has extraordinary significance for us to analyse the influence of wealth effect on the U.S. current account deficit and then the relationship between the U.S. economic imbalance and economic globalization.From the angle of economic and financial globalization,the paper intends to analyse the influence of wealth effect on the inflated consumption and investment in the U.S. by means of combining stock analysis and flow ananlysis,and futher to prove the point that the main cause of the U.S. external imbalance is the capital appreciation effect rather than unfair foreign trade. Our...