Fed's Gramlich on budget and trade deficits

In a speech on 'Budget and Trade Deficits: Linked, Both Worrisome in the Long Run, but not Twins' given on 25 February, Edward Gramlich of the Federal Reserve warned that large persistent U.S. budget and trade deficits could lead to "significant economic adjustments" worldwide, and suggested a fiscal belt-tightening was in order.

Gramlich said there are obviously strong links between budget and trade deficits, and the deficit-debt dynamic relationships are very similar. At the same time, it is

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