To what extent should a government take action if a country such as the USA or UK has a persistent deficit on its current account of the balance of payments?
Presentation of BoP theory focused on the current account and capital and financial account mirroring each other
– Discussion of BoP for US (and/or UK) pointing at the two accounts and discussing the main sources of imbalance
– Explicit reference to the closing case study detailing the two views on analysing BoP – ‘everything is great’ v. ‘sky is falling in’
– Discussion of the causes behind PERSISTENT deficit with graphs – a lot of literature on this, esp. in the case of the US
– Outline of possible government policies and the theory of how they might be used to reduce BoP deficit or help finance it.
– Discussion of how likely the policies are to be used in the present
– Conclusions – mainly focused on policies that stimulate competitiveness and investment attractivenes