Trade deficits
Always one to plug a friend (at least when I agree with him), here's Bob Murphy's latest article on the counter-intuitive but nonetheless true fact that Perpetual Trade Deficits Can Be Good.
"The elementary point is that a current account deficit (a slightly broader term that includes the trade deficit) is the flip side of a capital account surplus; see here for a fuller explanation."
"A large trade deficit - even one that persists for decades - is not necessarily bad or unsustainable. As I hoped to show in this essay, if the Austro-libertarians ever realized their dream, the resulting society would almost certainly have massive trade deficits - and this would be a natural reflection of its economic might."
Interesting stuff. As my former econ prof Gary Wolfram often said: "I run a trade deficit with the Japanese all the time. Doesn't bother me."
"The elementary point is that a current account deficit (a slightly broader term that includes the trade deficit) is the flip side of a capital account surplus; see here for a fuller explanation."
"A large trade deficit - even one that persists for decades - is not necessarily bad or unsustainable. As I hoped to show in this essay, if the Austro-libertarians ever realized their dream, the resulting society would almost certainly have massive trade deficits - and this would be a natural reflection of its economic might."
Interesting stuff. As my former econ prof Gary Wolfram often said: "I run a trade deficit with the Japanese all the time. Doesn't bother me."