Abstract:Based on the framework of new open macroeconomics,this paper constructs an intertemporaltheoretical model of current accounts including fiscal balance(or fiscal surplus),and uses the data of65 countries(or regions)from 1991 to 2017 to test the effect of policy deficits on the current account im⁃balance is“twin deficits”or“twin divergence”. The study shows that the fiscal deficit is a significantcause of current account imbalance. There is a significant "twin deficits" effect between the two. The increase in the fiscal deficit will lead to a more serious current account deficit for a country. In the opposite case,the opposite is true. Fiscal policy can thus address a country's current account imbalances,but the economic characteristics of different countries lead to significant differences in governance efficiency. Specifically,countries with high trade openness and low government debt have high governance efficiency under a floating exchange rate system. Countries with low trade openness and high government debt have low governance efficiency under a fixed exchange rate system. To manage the current account imbalances,fiscal policy needs to consider the national idiosyncratic factor of productivity growth rate. If the characteristic factor is higher,that is,when a country's productivity growth rate is faster,it tends to exacerbate the country's current account deficit,and it is not suitable to use expansionary fiscal policy then. In the opposite case,it is not appropriate to adopt an austerity fiscal policy. That is,to control the imbalance of the external economy,the implementation of fiscal policy should be counter-cyclical.