MIT's Olivier Blanchard presents his views on current account deficits later this week in the annual Mundell-Fleming lecture, at the IMF Seventh Jacques Polak Annual Research Conference in Washington, DC. This year the theme is capital flows, and Blanchard's papers is on Current Account Deficits in Rich Countries (PDF).
In this lecture he takes "a step back from current policy debates" and looks at "the case for policy intervention in the face of large current account deficits in rich countries." While "reducing these distortions ..is clearly desirable", he argues that the focus for policy should be on the distortions and "not the reduction of current account deficits per se." Blanchard concludes on this note:
If such measures were taken, existing simulations by the Fed and by the IMF suggest that imbalances will indeed be reduced, but will still remain large. The question is then whether more should be done. This is where this lecture is most relevant. The answer is maybe not, unless and until we have a good understanding of remaining distortions, and how they justify further policy intervention.