1/8
This paper argues that there's no evidence of an adverse “China shock” on the US economy, and uses the following graph showing employment in the manufacturing sector to make that point.
But as Matt Klein and I argue in our book, this approach is...
cato.org/policy-analysi…
This paper argues that there's no evidence of an adverse “China shock” on the US economy, and uses the following graph showing employment in the manufacturing sector to make that point.
But as Matt Klein and I argue in our book, this approach is...
cato.org/policy-analysi…
2/8
based on an obsolete model of trade. First, it has been many decades since the impact of trade on the US or any other economy can be assessed as a function of bilateral imbalances. Given the highly globalized nature of trade, these are really not meaningful...
based on an obsolete model of trade. First, it has been many decades since the impact of trade on the US or any other economy can be assessed as a function of bilateral imbalances. Given the highly globalized nature of trade, these are really not meaningful...
3/8
any more, and matter only to the extent that they affect overall trade imbalances. And because these are mainly drive by savings imbalances in the surplus countries, which are themselves a consequence of the way income is distributed, I really don’t think bilateral trade...
any more, and matter only to the extent that they affect overall trade imbalances. And because these are mainly drive by savings imbalances in the surplus countries, which are themselves a consequence of the way income is distributed, I really don’t think bilateral trade...
4/8
agreements, tariffs, or even WTO accession make much of a difference except in how they shift imbalances around. The adverse impact that trade surpluses in China, Germany, Japan and elsewhere have on the global economy occurs because of the ways in which consumption...
agreements, tariffs, or even WTO accession make much of a difference except in how they shift imbalances around. The adverse impact that trade surpluses in China, Germany, Japan and elsewhere have on the global economy occurs because of the ways in which consumption...
5/8
in the deficit countries is converted into savings in the surplus country. Because the world needs more consumption, and not more savings, their net impact is to put downward pressure on global growth.
The second problem – much more important but perhaps less...
in the deficit countries is converted into savings in the surplus country. Because the world needs more consumption, and not more savings, their net impact is to put downward pressure on global growth.
The second problem – much more important but perhaps less...
6/8
well understood – is precisely the way in which this upward pressure on global savings is absorbed by countries like the US, which by definition must adjust by lowering savings (assuming, as I do, that investment in the US is not constrained by scarce and expensive...
well understood – is precisely the way in which this upward pressure on global savings is absorbed by countries like the US, which by definition must adjust by lowering savings (assuming, as I do, that investment in the US is not constrained by scarce and expensive...
7/8
capital but rather by weak demand). The US doesn’t necessarily have lower savings in the form of higher unemployment. It can also do so via higher US household debt or a higher US fiscal deficit, and it is mainly the US policy response that determines among these adverse...
capital but rather by weak demand). The US doesn’t necessarily have lower savings in the form of higher unemployment. It can also do so via higher US household debt or a higher US fiscal deficit, and it is mainly the US policy response that determines among these adverse...
8/8
consequences. Because US policy in recent decades has pretty consistently chosen higher US household and fiscal debt over higher unemployment, trying to measure the impact of China’s trade surplus on US unemployment means measuring the wrong thing.
consequences. Because US policy in recent decades has pretty consistently chosen higher US household and fiscal debt over higher unemployment, trying to measure the impact of China’s trade surplus on US unemployment means measuring the wrong thing.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
