Economics & Global Affairs

1751 Items

A clerk checks her smartphone near a display advertising domestically produced Chinese beef and lamb at a supermarket in Beijing, May 12, 2017. A new trade deal with the U.S. could help feed China's growing appetite for beef and increase natural gas imports but will likely make only a negligible dent in the U.S. trade deficit. (AP Photo/Mark Schiefelbein)

(AP Photo/Mark Schiefelbein)

Analysis & Opinions - Peterson Institute for International Economics

Five Reasons Why the Focus on Trade Deficits Is Misleading

| March 2018

President Trump has asserted that trade balances are a key measure of a nation’s commercial success and that large US trade deficits prove that past trade approaches have been flawed. But trade deficits are not in fact a good measure of how well a country is doing with respect to its trade policies. Many of the assumptions on which the administration’s beliefs rest are not supported by the evidence. This Policy Brief argues that trade deficits are not necessarily bad, do not necessarily cost jobs or reduce growth, and are not a measure of whether foreign trade policies or agreements with other countries are fair or unfair. Efforts to use trade policy and agreements to reduce either bilateral or overall trade deficits are also unlikely to produce the effects the administration claims they will and instead lead to friction with US trading partners, harming the people the policies claim to help.

An American flag is flown next to the Chinese national emblem and flags during a welcome ceremony for visiting U.S. President Donald Trump outside the Great Hall of the People in Beijing. November 9, 2017 (Andy Wong/Associated Press).

Andy Wong/Associated Press

Analysis & Opinions - Cato Unbound

The Future of U.S.-China Relations Begins at Home

| Mar. 12, 2018

Kori Schake’s essay (and the book from which it is adapted) provides a serious, penetrating, and provocative invitation to debate the overriding geostrategic challenge of our time: what to do about the rise of China. Safe Passage is an outstanding example of the sort of work we champion at the Harvard Belfer Center’s Applied History Project. It illuminates current challenges by careful analysis of the historical record. And the case she examines in which the United States rose to rival and eventually surpass the British global hegemony is among the most instructive of the 16 cases in the Harvard Thucydides’ Trap case file for policymakers seeking to cope with the current U.S.-China competition.

In this March 10, 2018, photo, President Donald Trump speaks at a campaign rally at Atlantic Aviation in Moon Township, Pa. Weeks after prodding lawmakers to stand up to the National Rifle Association,Trump is backing off his call for increasing the minimum age to buy an assault weapon — an idea strongly opposed by the NRA. (AP Photo/Carolyn Kaster)

(AP Photo/Carolyn Kaster)

Analysis & Opinions - Globe and Mail

Trump Rules by Breaking the Rules

| Mar. 12, 2018

Over the past week - indeed, over the past year - U.S. President Donald Trump has broken one political rule after another. "When I signed up to be a conservative," an eminent Washington think-tanker said to me on Thursday, "I thought conservatism stood for free trade, fiscal responsibility and personal character." He might have added some firmness towards dictators.

Federal Reserve Chairman Jerome Powell gestures while he testifies to the House Financial Services Committee on Tuesday, Feb. 27, 2018. (AP Photo/Jacquelyn Martin)

AP Photo/Jacquelyn Martin

Analysis & Opinions - Project Syndicate

The Fed Should Be Careful What It Wishes For

| Feb. 28, 2018

Empirical relationships in economics are sufficiently fragile that there is even a “law” about their failure. As British economist Charles Goodhart explained in the 1980s, “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” Central banks in advanced economies have recently been providing a few more case studies confirming Goodhart’s Law, as they struggle to fulfill their promises to raise inflation to the stable plateau of their numerical targets.