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5 votes
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The term "Most Favoured Nation" is misleading to me. Please explain

You seem to have it the wrong way around. The act of country A extending Most Favoured Nation status to country B only affects the import tariffs on country B's products, not those on other ...
Giskard's user avatar
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4 votes
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What is the difference between trade deficit and current account deficit?

They are very related concepts but they are not completely same. Current account deficit occurs when country spends more on imports than it receives in imports. Trade deficit means that more imports ...
1muflon1's user avatar
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3 votes
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Causes of trade deficit: Multiple views

Often a good answer consist the most of shedding light on some aspects of the terms of the question itself. I hope a couple of remarks could be useful. About causality, the fact is that current ...
escaiguolquer's user avatar
3 votes
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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?

This is an excellent question and I will do my best to give you a well thought out answer. Many observers believe the U.S. dollar (USD) will lose its status as the world's reserve currency. In fact, ...
Daniel's user avatar
  • 476
3 votes

Trade in services between the US and China

Table 2.2 of https://www.bea.gov/scb/pdf/2017/10-October/1017-international-services-tables.pdf suggests US exports of services to China in 2016 worth $\$54$bn and US imports of services from China ...
Henry's user avatar
  • 4,765
3 votes
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Must total world net exports be zero?

That depends on your model of the world, and on how you define "goods and services". In a gold standard world, you essentially exchange goods and services with gold. Gold mining is therefore simply ...
Chris tie's user avatar
  • 870
3 votes

How are trade deficits financed?

This can be visualized nicely by an example: Let’s say there are two islands in the world. And let’s just say island A only produces apples and island B only produces bananas. Also, the (real) ...
Chris tie's user avatar
  • 870
3 votes

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

Since we are not trading with aliens (yet), you are right in assuming the global account balance ought to be zero. Your data contradicts this because it is collected by numerous statistical agencies ...
E. Sommer's user avatar
  • 1,325
3 votes
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connection between foreign assets and trade surplus / deficits

Piketty is correct, this is well known mechanism thats discussed in any international economics 101 textbook. I think the best way how to see how this work is to forget about money for a second. ...
1muflon1's user avatar
  • 57.1k
3 votes

If the BOP is always equal to 0 then why would a trade imbalance cause currencies to fluctuate?

Ignoring net errors and omissions and the official reserve account, it is indeed just the current account and capital account and the BoP always balances. However, under floating FX rates, the ...
AKdemy's user avatar
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2 votes
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Germany's current account surpluses: Negative effect? How to solve them?

As requested in comments: German banks lost a lot of money in the US sub-prime crisis and would have lost a lot more in Greece if the Eurosystem had not saved them. This is what might reasonably be ...
Henry's user avatar
  • 4,765
2 votes

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

The economics of trade can broadly be divided into two parts. There is a microeconomic part concerned with patterns of trade in particular kinds of goods, their causes such as factor endowments and ...
Adam Bailey's user avatar
  • 8,529
2 votes

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

Its all relative when evaluating investments: A) It might be risky but pay a relatively high return. It could be the case that the local interest rates are high even taking into account a potential ...
Fix.B.'s user avatar
  • 2,668
2 votes

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

Here is a reference by Feldstein, Krugman that is often quoted when discussing the FX neutrality of border tax adjustments: http://www.nber.org/chapters/c7211.pdf Another useful reference that takes ...
drcms02's user avatar
  • 163
2 votes

Abolishing all tariffs without reciprocity

You get cheaper access to inputs. For a large advanced economy that is relatively diversified, it is possible that unilateral tariff reductions across many or all sectors can be good for the economy ...
nathanwww's user avatar
  • 626
2 votes
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Ban an import that is exported

In general, no, it can't impose stricter rules on imports than it does on domestic production. Or more accurately, it could, but the countries exporting fur to Norway could challenge this. The guiding ...
410 gone's user avatar
  • 8,168
2 votes

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

To answer the question, I feel it is needed to correct one misunderstanding first: trade deficit does not mean the government buys imported products more than it sells the exported products. Rather, ...
HarmlessEcon's user avatar
2 votes
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Which economical consequences could happen to a country if it forbiddes importing cars?

1- Some basic macroeconomic fundamentals I highly doubt a trade imbalance is causing high inflation. The trade deficit is likely happening because of economists call "Twin Deficits". I'll spare you ...
Pedro Cavalcante's user avatar
2 votes

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

To complement @1muflon1's answer (+1). Here are some definitions from the Deardorffs' Glossary of International Economics, a very reliable source of information. Trade deficit is simply defined as "...
emeryville's user avatar
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2 votes
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How does the US have gross national savings while running a trade deficit?

Premises of your Q are simply false: If a country has a positive savings rate, that means that more money had to come into the country from somewhere outside of the country. This is completely ...
1muflon1's user avatar
  • 57.1k
2 votes

Why doesn't national savings, in aggregate, always equal to zero in monetary terms?

I think this boils down to misunderstanding what saving in macroeconomics is. Saving does not cancel each other out. In closed economy, private saving is difference between income (which is by ...
1muflon1's user avatar
  • 57.1k
2 votes

Why doesn't imports from receiving country match exports from sending country?

In UN COMTRADE, imports are recorded cif (cost insurance and freight) while exports are fob (free on board). This may represent a 10% to 20% difference. Despite all efforts made by national and ...
AKdemy's user avatar
  • 4,121
1 vote
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How is India able to increase its foreign exchange reserves despite historically running a trade deficit?

The central bank's accounts are not the same as entire country's accounts. The foreign currency reserves statistic comes from the Reserve Bank of India, the central bank, when it discloses its ...
H2ONaCl's user avatar
  • 941
1 vote

Import/export by sector/country data source

I believe that the UN Comtrade database is the main data source for this kind of query with substantial country coverage. It's broken down by HS code. It has its issues. Reporting is based on ...
Dan's user avatar
  • 1,366
1 vote

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? It would be personal consumption expenditures which ...
Mike J's user avatar
  • 1,467
1 vote

Why is trade deficit a good thing?

First off, just because economists say that the trade deficit is not a negative thing, does not mean it is positive. Yes, trade is balanced in the long run. In and of itself, a trade deficit is ...
BB King's user avatar
  • 6,238
1 vote

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

The IMF Data, the UN Country Data or the World Bank Open Data should be good data sources covering a wide range of countries.
JoaoBotelho's user avatar
  • 2,155
1 vote
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how is a trade imbalance related to domestic savings?

When Krugman talks about savings, he is presumably talking about the difference between production and consumption (personal consumption and government consumption) in a country as a whole. Although ...
Henry's user avatar
  • 4,765
1 vote

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

We have the following cases: 1) No capital mobility: If there is no capital mobility, the trade balance is necessarily zero in equilibrium i.e. exports equal imports. When there is a trade surplus, ...
Chetna Ahuja's user avatar

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