Financing the U.S. Trade Deficit: Role of Foreign Governments
Description
The nation's trade deficit is equal to the imbalance between national investment and national saving. The financial turmoil and economic contraction during 2008 reduced the gap between national saving and investment. The result was a decline in the trade deficit and the net inflow of capital. If total net capital inflows decline, mainstream economics suggests, all else held constant, that the dollar and trade deficit would decline, U.S. interest rates would rise, and U.S. spending on capital goods and consumer durables would fall, all else equal.
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Description
The nation's trade deficit is equal to the imbalance between national investment and national saving. The financial turmoil and economic contraction during 2008 reduced the gap between national saving and investment. The result was a decline in the trade deficit and the net inflow of capital. If total net capital inflows decline, mainstream economics suggests, all else held constant, that the dollar and trade deficit would decline, U.S. interest rates would rise, and U.S. spending on capital goods and consumer durables would fall, all else equal.
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Labonte, Marc.Financing the U.S. Trade Deficit: Role of Foreign Governments,
report,
June 29, 2009;
Washington D.C..
(digital.library.unt.edu/ark:/67531/metadc26324/:
accessed September 21, 2018),
University of North Texas Libraries, Digital Library, digital.library.unt.edu;
crediting UNT Libraries Government Documents Department.