Questions tagged [balance-of-trade]

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83 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, ...
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2answers
146 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 ...
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1answer
448 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?
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2answers
51 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 ...
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2answers
103 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?
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15 views

Testing the Marshall-Lerner Condition

Assuming initially £1=$2 Exports Px £100 QDx1 500 Export Revenue £50,000 Imports Pm1 £50 QDm1 1000 Import Spending £50,000 Trade Balance = £0 After a 10% depreciation of the £ Assuming PEDx = -0....
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0answers
25 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 ...
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0answers
12 views

Relationship between Fiscal policy and net exports

I am confused about the relationship between fiscal policy and net exports. Suppose government goes for expansionary fiscal policy Case 1  - If public expenditure rises, income rise, rise in ...
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2answers
57 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 ...
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0answers
83 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 ...
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3answers
106 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 ...
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0answers
4 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 ...
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0answers
31 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 ...
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1answer
179 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 ...
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1answer
41 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.
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0answers
54 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 ...
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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.
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1answer
18 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 ...
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0answers
6 views

Deficit adjustment - role of exchange rates

Krugman states the following: Suppose the world economy is in equilibrium. Suddenly the dollar depreciates for some reason. Almost all economists would agree that long run effect would be some ...
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1answer
34 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?
5
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1answer
123 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 ...
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1answer
68 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 ...
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1answer
158 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 ...
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1answer
27 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 ...
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1answer
2k 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 ...
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1answer
29 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 ...
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1answer
24 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 ...
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1answer
119 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 ...
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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.
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2answers
263 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?
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2answers
519 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 ...
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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?...
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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?
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1answer
442 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 ...
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1answer
136 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, ...
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2answers
23 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 ...
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1answer
166 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, ...
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1answer
77 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 ...
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0answers
32 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?
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1answer
62 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 ...
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2answers
170 views

Currency Values, Developing Economies and Balance of Trade

For a developing economy like India, where balance of trade is negative, is it good to have a weak dollar or a strong dollar? Dollar value increases (Rupee, the local currency, weakens), imports (...
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1answer
43 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 ...
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5answers
205 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 ...
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2answers
2k 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 ...
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0answers
38 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 ...
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2answers
124 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 ...
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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 ...
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1answer
55 views

Data: Trade imbalance at the County level in the US

I am looking for some source of data on trade imbalance at a county level in the US, preferably for years 1990-2007. Does anyone know if such data can be publicly available? Or any paper that have ...
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2answers
685 views

What is the relationship between S&P500 and the US dollar

In the recent past, both the S&P 500 and the USD (against other currencies) have appreciated a lot. From what I understand, if USD goes up against other companies, the major companies of the S&...
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1answer
50 views

How does an increase in domestic interest rate increase capital inflow?

What I have typed in the title is all I want to know.