The ongoing Lebanese economic crisis has brought more to the fore the importance of the current account deficit in perpetuating the crisis. This is because, in the absence of sizable capital inflows to finance the current account deficit, the latter would necessitate depleting foreign reserves for that purpose and endangering the fixed exchange rate regime in the process. So an understanding of the determinants of the current account becomes essential to getting a grip on the crisis. In this spotlight, we will do just that by approaching the current account from the perspective of savings and investment.
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Saving, Investment and the Current Account in the Lebanese Economy