Economy
Twin Deficits
Definition
When a country runs both a fiscal deficit (government spending exceeds revenue) and a current account deficit (imports exceed exports) simultaneously.
Explanation
The United States is the classic twin-deficit economy — the government borrows heavily (fiscal deficit) while the country imports far more than it exports (current account deficit). The twin deficits are linked through national accounting: when government saves less, the country must borrow from abroad. Twin deficits are sustainable for reserve currency issuers but dangerous for emerging markets.