Outgoing La Follette School of Public Affairs Associate Director Menzie Chinn has won a $10,000 grant from the University of Wisconsin–Madison Center for World Affairs and the Global Economy to pursue his research on exchange rates and the world economy’s large current account imbalances.
Chinn investigates which economic factors (openness to trade and financial flows) and policies (exchange rate regimes, capital controls) determine the pace at which current account balances and real exchange rates adjust.
A current-account deficit occurs when the value of a country’s imports is greater than the combined value of exports and income from abroad. The current-account deficit is a broader measure than a country’s trade deficit because, in addition to imports and exports, it includes income from assets abroad after payments for liabilities owed to foreigners are subtracted out.