Advanced Search
MyIDEAS: Login to save this paper or follow this series

Refuting the Trade Deficit Rationale

Contents:

Author Info

  • W. Raymond Mills

    (Emertius Associate Professor of City & Regional Planning, The Ohio State University)

Abstract

This article provides a defense of a sentence lifted from the Final Report of the United States Trade Deficit Review Commission. 'The savings shortfall argument falsely presumes that causation goes from savings to the trade deficit'. The savings shortfall argument is support by nothing more than reasoning by analogy from the pre-trade closed economy. The equation Savings equal Investment plus the Trade Deficit cannot be reasonably interprepted as a closed system. Factors outside this equation control the level of both investment and the trade deficit. I support my position by reviewiing in detail the way the Capital Account is calculated, to show that the Current Account Balance controls the level of the Capital Account. I also review the role of the stock market in transferring wealth from the business sector to the personal sector, effectively making irrelevant the low level of savings as reported by the National Income and Product Accounts.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://128.118.178.162/eps/it/papers/0407/0407012.pdf
Download Restriction: no

File URL: http://128.118.178.162/eps/it/papers/0407/0407012.ps.gz
Download Restriction: no

File URL: http://128.118.178.162/eps/it/papers/0407/0407012.doc.gz
Download Restriction: no

Bibliographic Info

Paper provided by EconWPA in its series International Trade with number 0407012.

as in new window
Length: 12 pages
Date of creation: 26 Jul 2004
Date of revision:
Handle: RePEc:wpa:wuwpit:0407012

Note: Type of Document - doc; pages: 12 . A polemic
Contact details of provider:
Web page: http://128.118.178.162

Related research

Keywords: Savings; Trade Deficit; Pre-trade economy; Closed System; Capital Account; Current Account; Financial Flows;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpit:0407012. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.