Page 26 - The South China Business Journal
P. 26
C. Today
By J.D. Foster, Senior Vice The De
President, Economic Policy
Division, and Chief Economist
of U.S. Chamber of Commerce
Focusing on Spe
Overall trade deficits may pose a danger; Trade deficits may matter if they result in
bilateral trade deficits don’t. One can unsustainable levels of debt owed to overseas
easily see how this can be confusing. investors. Checking a patient’s temperature
is a simple way to test for fever. The analog
As Maurice Obstfeld of the IMF wrote for countries running trade deficits is to
recently, a country’s overall trade balance check the interest rate being charged. Foreign
is a macroeconomic phenomenon that investors are currently charging Americans
mirrors whether it spends less than its low interest rates to use their saving, so
income or more. for now the large U.S. trade deficit isn’t a
concern. But if it were to become a concern
A person who spends more than he or in the future the solution would be simple
she makes either sells an asset to cover the enough – the private sector would need to
difference or goes into debt. If the person save more and/or the public sector would
goes into debt, that person is accessing the need to dis-save less.
saving resulting from somebody else earning
more than they spend. Much the same As Obstfeld further wrote, “the structure
happens with countries. of bilateral trade reflects the international
division of labour – based on each country’s
The U.S. has run a substantial trade deficit comparative advantage.” The basic principle
for years, not because our trading partners guiding international trade – comparative
don’t play fair, but because on the one hand advantage – simply states that each country
U.S. businesses invest a lot in new plant and prospers best when each country focuses
equipment while the Federal government most on doing what it does best. This really
runs large deficits. On the other hand, is no different than the basic principle
Americans collectively don’t save enough to guiding all economic relationships in a free
cover all these needs and so we import the market economy. Why does Iowa produce
difference from investors overseas who save corn while Maryland produces crab cakes?
more than they spend. Why does Beyoncé sing while Steven
Hawking did physics?
Who causes
America’s trade The macroeconomic dimension determines
deficit? Americans. whether a country runs a trade deficit;
comparative advantage dictates the
composition of the trade deficit across goods
24 AmCham South China
By J.D. Foster, Senior Vice The De
President, Economic Policy
Division, and Chief Economist
of U.S. Chamber of Commerce
Focusing on Spe
Overall trade deficits may pose a danger; Trade deficits may matter if they result in
bilateral trade deficits don’t. One can unsustainable levels of debt owed to overseas
easily see how this can be confusing. investors. Checking a patient’s temperature
is a simple way to test for fever. The analog
As Maurice Obstfeld of the IMF wrote for countries running trade deficits is to
recently, a country’s overall trade balance check the interest rate being charged. Foreign
is a macroeconomic phenomenon that investors are currently charging Americans
mirrors whether it spends less than its low interest rates to use their saving, so
income or more. for now the large U.S. trade deficit isn’t a
concern. But if it were to become a concern
A person who spends more than he or in the future the solution would be simple
she makes either sells an asset to cover the enough – the private sector would need to
difference or goes into debt. If the person save more and/or the public sector would
goes into debt, that person is accessing the need to dis-save less.
saving resulting from somebody else earning
more than they spend. Much the same As Obstfeld further wrote, “the structure
happens with countries. of bilateral trade reflects the international
division of labour – based on each country’s
The U.S. has run a substantial trade deficit comparative advantage.” The basic principle
for years, not because our trading partners guiding international trade – comparative
don’t play fair, but because on the one hand advantage – simply states that each country
U.S. businesses invest a lot in new plant and prospers best when each country focuses
equipment while the Federal government most on doing what it does best. This really
runs large deficits. On the other hand, is no different than the basic principle
Americans collectively don’t save enough to guiding all economic relationships in a free
cover all these needs and so we import the market economy. Why does Iowa produce
difference from investors overseas who save corn while Maryland produces crab cakes?
more than they spend. Why does Beyoncé sing while Steven
Hawking did physics?
Who causes
America’s trade The macroeconomic dimension determines
deficit? Americans. whether a country runs a trade deficit;
comparative advantage dictates the
composition of the trade deficit across goods
24 AmCham South China
