The New Zealand dollar stabilized despite an unexpected
trade deficit caused by a jump in imports and a surprisingly large drop in consumer confidence.
Mostly he says unless the U.S. is a developing country without domestic access to capital (obviously not), out
trade deficit causes unemployment and asset bubbles.
Of course, the concept of reducing
the trade deficit causing short term benefits is weak.
Not exact matches
To make matters worse, economists can not agree on what has
caused America's manufacturing malaise or why the
trade deficit is so persistently large.
U.S. President Donald Trump has threatened to withdraw from NAFTA unless he can rework it in favor of the United States, arguing that the pact has hollowed out U.S. manufacturing and
caused a
trade deficit of over $ 60 billion with Mexico.
a
trade deficit can have a role in producing financial - market bubbles and the devastation that's
caused when those bubbles burst.
Reducing the fiscal
deficit, according to Shultz and Feldstein,
causes total U.S. savings to rise, and as total U.S. savings rise, the gap between U.S. savings and U.S. investment must fall, bringing down both the capital account surplus and the
trade deficit.
I don't recall reading that a fiscal
deficit will lead to,
cause a
trade deficit.
This is why Shultz and Feldstein claim that cutting the U.S. fiscal
deficit would
cause the U.S.
trade deficit to fall.
If the fiscal
deficit is crowding out investment, cutting it will
cause investment to rise, and it might rise by the full $ 100, in which case both savings and investment will rise by enough to have no impact on the
trade deficit.
In fact, if investors are worried at all about the U.S. fiscal
deficit, then if anything a cut in the
deficit will
cause even more money to enter the United States, and if the U.S. capital account surplus rises, then so must the U.S.
trade deficit, which is the opposite of what Shultz and Feldstein claim.
I am in the bottom right box, in which a cut in the U.S. fiscal
deficit will
cause no change in the U.S.
trade deficit because it will be matched by a decline in household savings as unemployment rises, as consumer debt rises, or both.
The U.S.
trade deficit will not decline, and may even rise if it
causes foreign confidence in the U.S. economy to rise.
Trade surpluses can have many causes, too often just the low share of GDP that ordinary households are allowed to keep, but trade surpluses or deficits that persist for many years are always the result of significant distortions at home or ab
Trade surpluses can have many
causes, too often just the low share of GDP that ordinary households are allowed to keep, but
trade surpluses or deficits that persist for many years are always the result of significant distortions at home or ab
trade surpluses or
deficits that persist for many years are always the result of significant distortions at home or abroad.
If Washington takes steps to reduce or eliminate Mexico's bilateral surplus with the United States, and this
causes net capital inflows into Mexico to decline, Mexico's [
trade]
deficit must decline, regardless of what happens to its bilateral surplus with the United States.
Finally, the fifth way would
cause the U.S.
trade deficit to decline in ways that would likely either reduce U.S. unemployment or reduce U.S. debt; this fifth way would also
cause the Chinese
trade surplus to decline in ways that would likely either increase Chinese unemployment or increase Chinese debt.
If, on the other hand, it
causes productive investment to rise, it is the reverse: a higher
trade deficit makes the United States richer.
The second two ways would change nothing for China but would
cause the U.S.
trade deficit to decline, either in ways that would reduce U.S. unemployment or that would reduce U.S. debt.
As evidence that the U.S.
deficit is
caused by expensive labor, high manufacturing costs, and the spendthrift habits of Americans, many economists will point out that the United States runs bilateral
trade deficits with many countries, and not just with China.
To return to our example, we want to understand what will happen if China runs a $ 22 billion
trade surplus and exports the full amount to the United States, which
causes the U.S. capital account surplus and the US current account
deficit both to rise by $ 19 billion.
How many times, for example, have you heard economists insist that the US
trade deficit was «
caused» by the fact that Americans refuse to save, or, even more foolishly, that «no one held a gun to the American consumer's head and forced him to buy that flat - screen TV»?
Until we understand this do not expect the global crisis to end anytime soon, except perhaps temporarily with a new surge in credit - fueled consumption in the US (which will
cause the
trade deficit to worsen) and more wasted investment in China (which, because it is financed with cheap debt, which comes at the expense of the household sector, may simply increase investment at the expense of consumption).
When concerns about burgeoning debt suddenly
caused inflows to reverse in 1997, the result once again was collapsing currencies and rising unemployment that violently converted
trade deficits into surpluses.
A tit - for - tat
trade war would leave all parties worse off, they say, while doing little to address the underlying
causes of the United States» big
trade deficits.
In particular, President Trump insisted that the free
trade agreement
caused millions of jobs to be sucked down to Mexico, resulting in a $ 63 billion
trade deficit with the US's southern neighbor.
Contrary to claims coming from some
trade hawks, America's large and persistent
trade deficit is not
caused primarily by bad
trade deals.
Chapman expects it will develop into a prolonged recession
caused largely by the bursting of the housing bubble and the weakness in the dollar attributable to the United States» large federal budget
deficit and international
trade imbalance.
President Trump's plans to force US companies to bring their factories back to the US, to renegotiate
trade deals and / or to impose
trade tariffs on China and Mexico would all
cause the US Current Account
deficit to shrink.
This
causes trade deficits, as the developing countries
trade goods to get the foreign exchange.
With bank debt at 2 trillion
causing debt deflation, a slump in output, supermarkets losing profits because of poverty, a slump in output, a massive
trade deficit that requires a massive boost of sovereign currency issue, I would say he is in the neoliberal mold, not the Labour one, and probably not that competent.
There is now broad consensus on how these imbalances - the huge gaps in
trade deficits and surpluses, and the associated gaps in national savings, consumption, and investment rates - helped
caused the housing bubble and the Great Recession.
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