The myth of the twin US deficits
According to Will Rogers, the American humorist: "It's not what we don't know that hurts us, it's what we know that ain't so."
A striking illustration is the preoccupation with the twin US deficits; budget and current balance of payments. The conventional wisdom is that these are mirror images of each other. The payments deficit reflects an excess of investment above domestic saving and the budget deficit is one main source of negative saving.
Alas, nothing is sadder than when a plausible theory is falsified by awkward evidence. The case for both a budget and a dollar correction has been powerfully stated by William Cline of the Washington Institute for International Economics*. But he is meticulous in providing data that enable one to take a different view.
He has a chart showing that, in the 1990s, the conventional relationship was turned upside down. The budget moved into surplus during the Clinton period from 1992 to 2000. But the current account deteriorated and has continued to do so, irrespective of the twists and turns of the fiscal balance.
Why this should have happened is no mystery. As Dr Cline observes, there was first an investment boom in the late 1990s associated with "the new economy". Second, there was a sharp decline in household saving, due in large part to the boom in residential property prices which, as in the UK, triggered a bout of consumer spending.
Thus, even if the budget deficit were cut in half by the end of President George W. Bush's term of office in 2008 it still does not follow that the payments deficit will fall correspondingly or even at all. Any number of offsetting changes in the US national accounts could occur.
In testimony before the Joint Economic Committee, Alan Greenspan, the US Federal Reserve Board chairman, was eloquent about the dangers of the budget deficit, but did not mention the balance of payments. His main fear was the long term one that the US administration was accumulating obligations for health and retirement programmes that it would not have the revenue to cover.
There is an alternative analysis of the US payments deficit. Richard Cooper, a former member of the Carter administration, argues that there is outside the US an excess of savings over potential investment opportunities**. This is reflected in the so-called puzzle of low real long-term interest rates. Prof Cooper believes that these alone are not enough to balance the world economy and that the real balancing force consists of non-US export surpluses.
None of this means that the US payments deficit can or should be allowed to rise indefinitely along the path projected by Dr Cline in the absence of policy adjustments to 7? per cent of gross domestic product by 2010 and 14 per cent by 2024. His own remedy is a combination of dollar depreciation and a modest acceleration of overseas growth, for instance in Europe, which he believes would reduce the 2010 US payments deficit to a sustainable 3 per cent. He advocates an "Asian Plaza" that would co-ordinate exchange rates realignment "to accompany a large one-step revaluation of the Chinese renminbi".
Like Mr Greenspan, I remain extremely sceptical of estimates of equilibrium exchange rates. The UK, for instance, has survived very well for at least the past 10 years with an exchange rate considered too high by many mainstream economists and manufacturing firms.
There is a more positive aspect too. If governments really carried out policies that were sensible on domestic grounds, exchange rates would fall into place. If the US embarked on a credible policy of deficit reduction, if the eurozone was to be a little less doctrinaire in its monetary policies and the east Asian countries were to give more attention to the welfare of their own citizens, the pattern of exchange rates would take care of itself.
A reduction in US domestic demand does not, however, depend only on fiscal adjustment. Mr Greenspan told the last Jackson Hole meeting that the US housing boom "will inevitably simmer down, home price increases will slow and even decrease. As a consequence, home equity extraction will cease and with it some of the strength in personal consumption expenditure. The surprisingly high correlation between increases in home equity extraction and the current account deficit suggests that an end to the housing boom could induce a significant rise in the personal savings rate, a decline in imports and a corresponding improvement in the current account deficit."
My own guess is that the slow motion US monetary tightening will come to an end and even be reversed once it is clear that the rise in asset prices is well and truly over. This in turn would nudge the dollar in the required direction without any heroics or unlikely international concordats.
* The United States as a Debtor Nation
** Is the US current account deficit sustainable? CS IFO Forum 美国双赤字之谜
美国幽默大师威尔?罗杰斯 (Will Rogers) 说：“令我们痛心的并不是自己所不知的，而是认识到我们所知的其实并非如此。”
人们对美国预算及经常帐户“双赤字”的关注便是一个明证。传统观点认为这两者互为镜像。经常帐户赤字反映的是投资超出国内储蓄，而预算赤字则是负储蓄的一大主要来源。
可惜，最令人难过的，莫过于合理的理论被令人难堪的证据否定。华盛顿国际经济研究院 (Washington Institute for International Economics) 威廉?克莱因 (William Cline) 有力地阐明预算及美元调整的论点 * 。但他在提供数据方面一丝不苟，竟然到了这些数据可让人采取不同观点的地步。
他的一个图表显示：在 20 世纪 90 年代，传统关系被颠倒。在 1992 年至 2000 年克林顿时期，预算转为盈余。但经常帐户却出现恶化，并且持续如此，不管财政结余如何起伏。
出现这种情况毫不奇怪。正如克莱恩博士所说，首先， 20 世纪 90 年代后期曾涌现与“新经济”有关的投资潮。其次，住宅物业价格暴涨触发了消费者支出狂潮，在很大程度上促使家庭储蓄急剧下降，英国的情况便是一例。
因此，即使预算赤字到 2008 年布什总统任期届满削减一半，也不能因此认为经常帐户赤字也会相应下降，甚至根本不会下降。美国国民帐户可能会出现许多抵偿变化。
美国联邦储备委员会主席艾伦?格林斯潘 (Alan Greenspan) 在联合经济委员会 (Joint Economic Committee) 作证时，就预算赤字的危险慷慨陈词，但只字未提经常帐户平衡。他的主要担心在未来：布什政府正为保健及退休计划积累债务，而国家税收不足以支付。
对美国经常帐户赤字还有另一种分析。前卡特政府成员理查德?库珀 (Richard Cooper) 表示，美国境外的储蓄超过潜在的投资机会 ** 。这体现在所谓的实际长期利率较低之谜上。库珀教授相信，这些储蓄本身不足以平衡世界经济，而真正的平衡力量来自非美国出口盈余。
所有这些都不是说，可以或者应该允许美国经常帐户赤字沿着克莱恩预测的趋势无限期增加，而不实行任何政策调节。克莱恩预测：经常帐户赤字到 2010 年将达到国内生产总值的 7.5% ，到 2024 年将达到 14% 。克莱恩的药方是将美元贬值和海外 ( 如欧洲 ) 增长适度提速相结合。他相信这会使 2010 年的美国经常帐户赤字降低至可持续的 3% 。他提倡通过“亚洲广场” (Asian Plaza) 协调汇率调整，“以配合中国人民币的一步到位式大幅升值。”
与格林斯潘一样，我对平衡汇率的估算一直颇为怀疑。以英国为例，尽管许多主流经济学家和制造企业认为英镑汇率过高，但英国至少在过去 10 年间发展非常顺利。
也有更具积极意义的一方面。如果各国政府切实执行就本国而言明智的政策，汇率会自然到位。如果美国着手实施可信的赤字削减政策，如果欧元区的货币政策能稍微少一点僵化，如果东亚各国更加重视本国公民福祉，那么汇率格局问题将会迎刃而解。
然而，决定美国国内需求下降的不仅是财政调节。格林斯潘在最近一次 Jackson Hole 会议中就表示，美国房屋市场热潮“必将降温，房价升幅将趋缓、甚至下跌。因而，房产股本提取将停止，个人消费支出势头将随之受阻。房产股本提取增长和经常帐户赤字之间令人惊讶的高关联性显示：房屋市场热潮终止可能会导致个人储蓄率大幅上升、进口下跌、经常帐户赤字也会出现相应好转。”
我的猜测是：一旦资产价格上涨确实停止，美国货币政策的缓慢收紧将告终，甚至出现逆转。这将会促使美元汇率朝着人们希望的方向发展，无需任何豪言壮语或国际协定。
* 《债务大国美利坚》 (The United States as a Debtor Nation)
** 美国经常帐户赤字可持续吗？ CS IFO 论坛
