57541. America's Maligned and Misunderstood Trade Deficit
- Author:
- Daniel T. Griswold
- Publication Date:
- 04-1998
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- America's annual trade deficit, already large by historical standards, could reach a new record in 1998, fueling protectionist sentiment in Congress. Political fallout from the trade deficit numbers could impede efforts to reduce barriers to trade in the United States and abroad. Contrary to popular conception, the trade deficit is not caused by unfair trade practices abroad or declining industrial competitiveness at home. Trade deficits reflect the flow of capital across international borders, flows that are determined by national rates of savings and investment. This renders trade policy an ineffective tool for reducing a nation's trade deficit.
- Topic:
- Economics and Political Economy
- Political Geography:
- United States