We provide a growth model with imported resources and foreign debt
accumulation providing the basis for two questions and regression
equations. 1) Under what conditions do growth rates of per capita income
remain positive if imported inputs such as oil have increasing real
prices? 2) Is accumulation of foreign debt driven by a current account
deficit of which two percent of the GDP stem from oil imports,
sustainable? For both questions we provide estimates for the USA with
the following results. Oil price growth rates have only a marginal
impact on those of GDP per capita as long as they exceed inflation rates
by not much more than they did in the past. The US foreign debt/GDP
ratio follows an unstable difference equation and therefore is not
sustainable. We briefly discuss possible future stabilization through
the market and through policies.
JEL-code: F21, O41, Q01.
Keywords: capital movements, growth, sustainability.
UNU-MERIT Working Papers ISSN 1871-9872