Week 5 Discussion Trade Deficits

Week 5 Discussion Trade Deficits - capital from abroad...

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What have been some major causes of the large U.S. trade deficits since 1992? What is a major benefit (you could address that issue) or a major cost ( or , you could address that issue) associated with trade deficits? (required: graded) TCO F Applied I found the link below extremely interesting. According to the testimony of Daniel Griswold Associate Director of the Center for Trade Policy and Studies, “The U.S. trade deficit is the result of a net inflow of capital to the United States from the rest of the world. Because of our stable and relatively free domestic market, we remain the world's most popular destination for foreign investment. We have become a net importer of capital because Americans do not save enough to finance all the available investment opportunities in our economy. This inflow of
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Unformatted text preview: capital from abroad allows us to pay for imports over and above what we export… If we want to change the U.S. trade deficit we must change the rate at which Americans save and invest.” He goes on to explain that it would be worse for the United States to be running a trade surplus. In Japan their high trade surplus also comes with the down fall of a record high unemployment rate. I guess it could be seen as a benefit to have a higher trade deficit considering that in 1991 when the United States experienced their smallest trade deficit in recent years, it was in the low of a recession. Source: http://www.cato.org/testimony/ct-dg061198.html...
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