Questions tagged [balance-of-trade]

The tag has no usage guidance, but it has a tag wiki.

Filter by
Sorted by
Tagged with
0
votes
0answers
12 views

Effects of a decrease of the policy rate on net exports

We've recently worked in class with the IS-LM-UIP model (where UIP stands for the uncovered interest rate parity). The central bank chooses the policy rate. Hence, the LM curve is horizontal. The IS ...
1
vote
2answers
48 views

connection between foreign assets and trade surplus / deficits

I am reading Piketty's "Capital in the 21st Century" and in Chapter 5 he writes "Furthermore, the evolution of a country's net foreign asset position is determined not only by the ...
0
votes
0answers
24 views

China's balance of payment and balance of trade - relation to inflation

I am struggling with understanding how China's balance of payments (negative, deficit) and balance of trade (positive, profit around 0.5 trln USD) affect it's inflation rate. Obviously, balance of ...
0
votes
0answers
38 views

How to define world interest rate using IS-LM-BP diagram?

Can you suggest where is the world interest rate in the economy which has a positive current account and a financial account surplus, fixed exchange rate and relative capital immobility? The graph of ...
0
votes
1answer
20 views

Net exports term in aggregate expenditure [duplicate]

This might be a basic question, which I don't yet understand. The aggregate expenditure (i.e., in my understanding, the total amount of inflation factored (i.e. real) money spent in the economy by its ...
3
votes
2answers
3k views

What is the difference between trade deficit and current account deficit?

I read this article and still don't understand the difference. "Spends more money on what it imports compared to the money it receives for what it exports" (how it defines current account deficit). "...
1
vote
2answers
43 views

Why is the Total Current Account Balance of World positive and does it mean that the world has a net Trade Surplus?

I wondered if it was possible for all countries to have a Trade Surplus - which turns out to be impossible because the total value of imports in the world must be equal to the total value of exports ...
2
votes
0answers
27 views

Why would expanding fiat paper issue lead to decreased exports?

I'm reading "A History of Money and Banking in the United States" by Murray Rothbard, and I'm having trouble understanding this one piece of history. Basically, the Massachusetts government issues ...
2
votes
2answers
252 views

How are trade deficits financed?

The usual answer is either "foreign debt" or "Foreign Direct Investment". But: Why does that make sense? And why wouldn't be financed otherwise like from importers taking out bank loans domestically ...
1
vote
2answers
112 views

How is India able to increase its foreign exchange reserves despite historically running a trade deficit?

Balance of Trade: https://tradingeconomics.com/india/balance-of-trade Foreign Exchange Reserves: https://tradingeconomics.com/india/foreign-exchange-reserves Remittances do help (avg. \$4B/mo) but ...
10
votes
1answer
159 views

Causes of trade deficit: Multiple views

I am trying to understand the causes and macroeconomic implications of running a trade deficit in the United States, and I came across a few different views on this topic. I'd like to know if there ...
1
vote
1answer
17 views

Sources of data for GDP and BoP accounts

When an American buys a coffee within the US, how does that 3.50 dollars worth of consumption expenditure make it's way to the US GDP account? Is the information obtained from the company's tax ...
1
vote
0answers
45 views

Why a Current Account deficit implies a Financial Account surplus [duplicate]

Every macro textbook out there states that if a country has a Current Account deficit, it must have a surplus in the Financial account, but I have not heard a convincing explanation. Imagine a ...
1
vote
1answer
99 views

Why is trade deficit a good thing?

In general most economist agree that deficit is not a negative thing, but I have trouble understanding why For example if country A has 10\$ and country A runs trade deficit to B of 2\$ per year, ...
-2
votes
1answer
45 views

Why did no US politician start the trade war a decade earlier with China or possibly the Globe if it is a good thing to do? [closed]

Why did no US politician start the trade war with China (or possibly the Globe) a decade earlier if it is a good thing to do? I am asking for a list of reasons for why not.
1
vote
0answers
56 views

Why is it so hard to understand NCO = NE?

A lot of explanations about this matter depend on the fact that the foreign cash could be seen as a foreign assets. They say like "if you export a car and earn 100 yen, then it means that you have now ...
1
vote
1answer
34 views

Where's a good place to find Information on Non-OCED countries?

I'm looking for Private Savings (Sp), Investment (I), Taxes (T), Government Spending (G) for India.
1
vote
1answer
20 views

how is a trade imbalance related to domestic savings?

I was confused by a statement in an article from Paul Krugman in the NY Times: The reason America runs persistent trade deficits isn’t that we’ve given away too much in trade deals, it’s that we ...
0
votes
1answer
543 views

Why a current account surplus is bond to lead to an appreciation of a currency?

I have got some confusion in trying to explain why a trade surplus is going to lead to an increase in the exchange rate. The usual logic goes as follows. Export X > Import M Demand for the country's ...
1
vote
1answer
36 views

Are services included in the calculation of a trade deficit?

Are services included in the calculation of a trade deficit? Presumably measuring service exports is more difficult/less accurate(?) than for goods?
0
votes
1answer
70 views

Why do we say the US is in debt to China?

Apple import iPhones manufactured by factories in China. Apple has to pay for these Chinese manufacturers. So, Apple should be in debt with Chinese manufacturers. But why do we say the US government ...
5
votes
1answer
216 views

Is it true that the U.S has to run a chronic trade deficit with the rest of the world as a price to pay for being the world's reserve currency?

I have heard of the argument that in order for USD to be reserve currecy, the rest of the world must own enough USD to store it as reserves. In order for the rest of the world to own enough USD, U.S ...
4
votes
1answer
180 views

The term “Most Favoured Nation” is misleading to me. Please explain

My understanding If Country A extends MFN status to Country B with reduced tariffs for a product, then it must treat all other nations in the same way. By this WTO encourages multilateral ...
2
votes
1answer
29 views

Why do exports include only hard products?

Looking at country lists by exports. Diving into exports always shows things like gas turbines, computer hardware, petrolium -- all physical things. None show things like exporting services: financial ...
1
vote
1answer
30 views

Trade in services between the US and China

International trade consists of both goods and services, yet in the case of US-China trade for some reason both the media and official government releases only seem to quote the goods component. So ...
0
votes
1answer
27 views

Import/export by sector/country data source

I am looking for import/exports data by sector and country, with partner countries. The goal is to get a picture of overall imports/exports to/from a specific country with (possibly) all of its ...
1
vote
1answer
125 views

Which economical consequences could happen to a country if it forbiddes importing cars?

My country has major economical headaches each 10 years or so, like hyperinflation or defaults or things like that. It's been 17 years since the last major crisis (a larger crisis than the 1930's ...
1
vote
0answers
22 views

When finding targets in a trade war, does the goods balance or trade balance matter more?

By most measures, most people who look at trade balance, but it might include a good chunk of services imports/exports who might not be as readily subjected to tariffs.
0
votes
1answer
4k views

Recession and Net Export

When a country's economy is currently in recession (or has entered a recession), will the net export increase or decrease? What will happen to the major trade partner's net export (will it be the ...
2
votes
2answers
556 views

Abolishing all tariffs without reciprocity

Is a policy of abolishing tariffs without expecting other countries do so a sustainable economic policy? What are the arguments for or against it? Fear of imports is very common among people. Money ...
0
votes
2answers
179 views

Balance of Trade ( Surplus and Deficit)

I'm new to economics. I want to ask that what remedies that the government can actually employ to address the deficit/surplus in the fish trade balances over time? My attempt, Trade deficit (i) The ...
2
votes
1answer
39 views

Ban an import that is exported

Norway intends to shutdown the fur farming industry over the next 5+ years. In the meantime, can Norway ban imports and sales of fur without violating WTO regulation? Are there alternative strategies?...
1
vote
0answers
23 views

Where UK finds money to sustain its negative trading balance?

UK had a negative trading balance for the last 20 years. Where does it find money to finance it? Is such situation sustainable?
1
vote
2answers
332 views

How does Russia have so much foreign exchange reserves?

Source Russia is under U.S. sanctions. How does Russia have so much foreign exchange reserves?
1
vote
1answer
504 views

Why can we finance government deficit by having a trade deficit?

I encountered an example question regarding government deficit as follows: $G-T=(S-I)-(X-M)$ where $G$ is government spending, $T$ is net tax (tax minus transfer payment), $S$ is total private ...
0
votes
2answers
24 views

Have UK exports (goods and services) to Ireland declined in value since 2011?

Where can I find the relevant Office Of National Statistics data on UK exports to Ireland? I want to know if the value of UK exports to Ireland has declined since 2011 and if so, does anyone know why ...
-1
votes
1answer
532 views

Balance of Trade - Currency devaluation in a price taker economy

How will a real exchange rate devaluation affect Balance of Trade, if an economy is a price taker in world markets for both export and import?
4
votes
1answer
217 views

Must total world net exports be zero?

On the Wall Street Journal Op-Ed page (Trump’s Real Trade Problem Is Money ), John D. Mueller discusses the gold standard and claims something that I've either never heard before, don't understand, ...
3
votes
1answer
137 views

What is the proof for why border adjustments are exactly offset in theory by currency appreciation?

Why is it true, in theory, that border adjustments are exactly offset by currency appreciation? I've read the colloquial explanations online, but am looking for something more rigorous. For example, ...
-3
votes
1answer
83 views

How do currency traders resolve imbalances in the demand for different currencies?

Countries trade different amounts of goods that are inherently imbalanced. How do currency traders resolve these imbalances in the demand for different currencies? For example.... Imagine we have two ...
1
vote
0answers
34 views

Which model of trade is this?

In a recent article, Paul Krugman showed these equations: Which model is this? What do the symbols denote? Is the first symbol a v or nu?
1
vote
2answers
108 views

why in some countries trade deficits for a few years generates economical crisis and in United States 40 years of deficit hasnt?

why in some countries (e.g. Argentina) trade deficits for a few years generates economical crisis and collapse and in United States 40 years of deficit havent? Which are the economical effects in both ...
0
votes
1answer
78 views

Germany's current account surpluses: Negative effect? How to solve them?

The case for a pernicious persistent current account deficit is easy to build: the home country is borrowing abroad for a long period and that debt may reach a point of becoming unsustainable. There ...
5
votes
2answers
111 views

Do modern economists still believe balance of trade is an important concept in economics?

My understanding is that discussions about a nation's balance of trade was largely seen as important by mercantilists, but isn't really part of modern economics. Am I right about that?
1
vote
1answer
49 views

Why would investors from other countries want to invest in a country with a large CA deficit?

According to my textbook, the current account and financial account must balance; therefore, a country w/ at large CA deficit will need to fund this by a financial account surplus (i.e. they need to ...
1
vote
0answers
39 views

Cloth, Corn and Gold: James Stuart Mill example

I don't quite get James Stuart Mill's example of cloth, corn and gold in "Elements of Political Economy". He supposes that 20 yards of cloth takes the same amount of effort to make as 4 quarters of ...
3
votes
2answers
127 views

The Oil hike of the 2000's: Did it go unnoticed, and why?

I'm reading a macro text book, the authors stated that in the 2000's we witnessed the greatest increase in oil prices ever, even when compared to the 70's oil shocks. To most of us, this fact went a ...
1
vote
0answers
38 views

How does Global Saving Glut flood the market with cash?

When I was browsing the internet last night, I read a couple articles on the Global Saving Glut. And many has ascribed it to be a cause of US financial crsis. My question is how so? The articles argue ...
4
votes
2answers
3k views

What makes the Balance of Payments (BoP) to imbalance?

Theoretically the capital account balance should fully offset the current account balance and the BoP should be zero for any economy. What causes the imbalance or discrepancy in the overall BoP ? What ...
3
votes
5answers
354 views

Where are the payments for export in the balance of payment?

I know that when we sell some goods abroad, we credit Goods&Services part within Trade balance, which is a part of Current Account. What part of the Financial Account is debited with the sum ...