what are the alternate ways to finance current account balanace of payment deficit?

Question

related to economics/finance

Answer 1

The current account deficit is not a debt, and so does not need to be "financed". You maintain your own current account deficit every time you buy something in a store -- that doesn't mean you bought anything on debt and borrowed money.

You can go into a store and buy a $10 iron made in China without ever taking on debt. You can just use the cash from your last paycheck, right? You use the wealth you yourself generated to buy that iron. And when you do so, you increase the US trade/current account deficit.