Some cases in particular it has controversially been

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some cases. In particular, it has controversially been suggested that the United States current account deficit is driven by the desire of international investors to acquire U.S. assets (See Ben Bernanke, William Poole links below). However, the main viewpoint undoubtedly remains that the causative factor is the current account and that the positive financial account reflects the need to finance the country's current account deficit.
28 International Finance & Forex Management Notes Amity Directorate of Distance & Online Education Current account surpluses are facing current account deficits of other countries, the indebtedness of which towards abroad therefore increases. According to Balances Mechanics by Wolfgang Stützel this is described as surplus of expenses over the revenues. Increasing imbalances in foreign trade are critically discussed as a possible cause of the financial crisis since 2007. Many keynesian economists consider the existing differences between the current accounts in the eurozone to be the root cause of the Euro crisis, for instance Yanis Varoufakis, Heiner Flassbeck, Paul Krugman or Joseph Stiglitz. 1.11 Bilateral and Multilateral Agreements Trade agreements are either bilateral, involving two countries, or multilateral. While some believe that bilateral free trade agreements are a first step towards multilateral free trade, others point out that bilateral trade agreements are discriminatory and lead to fragmentation of the world trade system and decline of the multilateral free trade. Bilateral Trade is the exchange of goods between two countries. Bilateral trade agreements give preference to certain countries in commercial relationships, facilitating trade and investment between the home country and the foreign country by reducing or eliminating tariffs, import quotas, export restraints and other trade barriers A multilateral trade agreement involves three or more countries who wish to regulate trade between the nations without discrimination. They are usually intended to lower trade barriers between participating countries and, as a consequence, increase the degree of economic integration between the participants. Multilateral trade agreements are considered the most effective way of liberalizing trade in an interdependent global economy. Although multilateral trade existed earlier, it was only after World War II that nations recognized the need for a set of rules with the objective of securing market access for post-war recovering economies. The first such set of rules came in 1947 in the form of the General Agreement on Tariffs and Trade (GATT). GATT was replaced in 1995 by the World Trade Organization, which has more than 150 members. 1.12 Sovereign Credit Ratings A sovereign credit rating is the credit rating of a sovereign entity, i.e., a national government. The sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors looking to invest abroad. It takes political risk into account.

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