01715cas a2200253 a 4500 AALejournalIMF006120 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451873849 1018-5941 BD-DhAAL BD-DhAAL Kumhof, Michael. Fiscal Deficits and Current Account Deficits / Michael Kumhof, Douglas Laxton. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The effectiveness of recent fiscal stimulus packages significantly depends on the assumption of non-Ricardian savings behavior. We show that, under the same assumption, fiscal deficits can have worrisome implications if they turn out to be permanent. First, if they occur in large countries they significantly raise the world real interest rate. Second, they cause a short run current account deterioration equal to around 50 percent of the fiscal deficit deterioration. Third, the longer run current account deterioration equals almost 75 percent for a large economy such as the United States, and almost 100 percent for a small open economy. Mode of access: Internet Laxton, Douglas. IMF Working Papers; Working Paper ; No. 2009/237 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/237/001.2009.issue-237-en.xml IMF e-Library