Global imbalances: The new economy, the dark matter, the savvy investor, and the standard analysis

In this paper I review four perspectives on global imbalances: the standard analysis questioning their sustainability and three views skeptical of this conventional wisdom. I raise questions about the internal consistency, conformance with the facts, and predictive content of each of the arguments challenging the mainstream analysis of U.S. current account sustainability. Moreover, I show that several of these objections to standard sustainability arithmetic are incompatible with one another.