Postprint version. Published in International Economic Review, Volume 36, Issue 3, August 1, 1995, pages 555-568.
NOTE: At the time of publication, the author Eric Fisher was not yet affiliated with Cal Poly.
Extending the theory of generational accounts, I show that the conventional current account is not related to the real effects of a country's fiscal policy. For any international array of fiscal policies, a country can implement its own policy so that the conventional government and current account deficits are zero in every period. I argue that economists should develop a new measure of the current account. This measure is forward looking and keeps track of expected transfers between countries.