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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 paper 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 a global savings glut (an external factor) that causes the US current account deficit or in contrary this deficit is home-grown and the petrodollar savings glut hypothesis does not hold. It particularly focuses on world's largest oil exporter to find out if the homegrown deficit hypothesis for the world's largest oil consumer holds.
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