Introduction

Assumptions of how the U.S. economy functions have been made obsolete by the globalization of production and finance.

For example, large U.S. budget deficits did not spur economic growth in the United States, as one might have expected, because imported goods accounted for much of the increase in consumption. The United States has been able to sustain large budget and trade deficits without starving domestic business investment, as one might have expected, because foreign capital has f...