A country's economy has a double deficit when it is operating in deficit on two important metrics: the

government budget balance The government budget balance, also alternatively referred to as general government balance, public budget balance, or public fiscal balance, is the overall difference between government revenues and spending. A positive balance is called a '' ...

and the

current account (balance of payments) In economics, a country's current account records the value of exports and imports of both goods and services and international transfers of capital. It is one of the two components of its balance of payments, the other being the capital accou ...

. A deficit in the government's budget balance means that the government is spending in excess of taxation revenue and the deficit is made good by borrowing, which adds to the

national debt A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit oc ...

. While borrowing for investment purposes is generally seen as wise, to do so to fund routine recurrent expenditure is not. A country's

current account Current account or Current Account may refer to: * Current account (balance of payments), a country's balance of trade, net of factor income and cash transfers * Current account (banking) A transaction account, also called a checking account, ch ...

records the value of exports and imports of both goods and services and international transfers of capital. It is one of the two components of its

balance of payments In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a ...

, the other being the

capital account In macroeconomics and international finance, the capital account, also known as the capital and financial account records the net flow of investment transaction into an economy. It is one of the two primary components of the balance of payments, ...

(also known as the financial account). Current account measures the nation's earnings and spendings abroad and it consists of the

balance of trade The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...

, net ''primary income'' or ''factor income'' (earnings on foreign investments minus payments made to foreign investors) and net unilateral transfers, that have taken place over a given period of time. The current account balance is one of two major measures of a country's foreign trade (the other being the

net capital outflow Net capital outflow (NCO) is the net flow of funds being invested abroad by a country during a certain period of time (usually a year). A positive NCO means that the country invests outside more than the world invests in it. NCO is one of two majo ...

). A current account surplus indicates that the value of a country's net foreign assets (i.e. assets less liabilities) grew over the period in question, and a current account deficit indicates that it shrank. Both government and private payments are included in the calculation. It is called the current account because

goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not tran ...

and

services Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a p ...

are generally consumed in the current period.''Ecological Economics: Principles And Applications''. Herman E. Daly, Joshua Farley; Island Press, 2003

References

{{reflist Balance of payments National accounts International macroeconomics

See also

References