Twin Deficit
The empirical co-movement of the federal budget deficit and the current account deficit, observed in the US in most years since 1980. The mechanism is the national income identity: with stable private saving, a larger budget deficit (lower public saving) must be offset by lower investment or by importing capital from abroad -- and capital inflows are mechanically the mirror image of a current account deficit. The twin-deficit framing helps investors anticipate that fiscal expansions will often coincide with dollar strength and capital inflows when the alternative adjustment channels are blocked.
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10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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