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

Other responses:

• 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.]