Given the secrecy that wraps the flows of the GCC countries petrodollar surpluses to the United States and the pressures on these countries to spend and recycle more, this study attempts to uncover the direct and reverse causal relationships between the GCC financial accounts and the US current account deficit. It examines whether the GCC petrodollar surpluses are part of the global savings glut (an external factor) that causes the US current account deficit, or on the contrary this deficit is home-grown and the petrodollar savings glut hypothesis does not hold. It particularly focuses on the worlds important oil exporters to find out if the homegrown deficit hypothesis holds for the worlds largest oil consumer. The implications and policy recommendations for this significant source of global external imbalances are provided
Key words: Capital Account; Financial Account; Direct and Reverse Causality Article Language: EnglishTurkish
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