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National Saving and International Trade

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The pattern of capital flows and international asset ownership is intimately related to international saving patterns and investment opportunities. In the face of low national saving, domestic investment can be maintained only by reliance on additional foreign borrowing. The U.S. is a case in point. As its national saving declined in the 1980s, this country became a net importer of goods and services. A negative trade balance ultimately resulted in the U.S. becoming a debtor nation. Since the mid-1980s, foreign claims on assets in this country have exceeded U.S. residents’ claims on assets located abroad.

Suggested citation: “National Saving and International Trade,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-10, pp. 15, 10.01.1998.

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