All in all, the current account balance reflects the countless saving and investment decisions made within an economy. In addition to the decisions made by enterprises and households, fiscal policy plays a role here. Simulation exercises conducted by the Bundesbank reveal that the tax cuts passed in the United States will probably push up debt and current account deficit levels considerably.
7 This will do nothing to reduce global imbalances. Furthermore, given the diversity of economic relationships and level of interconnectedness with third countries, looking at the goods traded between two countries alone is insufficient.