Are Persistent Trade Deficits a Bad Thing?
The Economist asks:
Are persistent trade deficits a bad thing? Under what conditions are trade deficits benign, and under what conditions might they be a problem?
My answer is rather text-bookish (I consulted Krugman and Obstfeld's International Economics text before answering):
- Persistent trade gaps leave economies vulnerable - Mark Thoma
- Deficits that result from a loss of competitiveness can be trouble - Gilles Saint-Paul
- How a trade deficit is financed matters - Paul Seabright
- Bilateral trade statistics are very misleading - Hal Varian
- A deficit driven by excess consumption must eventually reverse - Michael Pettis
- Trade deficits are a problem if they reflect inadequate saving - Laurence Kotlikoff
[All responses here.]
Posted by Mark Thoma on Monday, December 19, 2011 at 10:10 AM in Economics, International Trade |
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