What’s the Big Deal About a Trade Deficit?: A VECM Analysis of Causality Between U.S. Economic Growth and its Trade Balance with NAFTA

2020 ◽  
Author(s):  
Ernst Coupet
Keyword(s):  
Economic Growth ◽  
Trade Balance ◽  
Trade Deficit

scholarly journals Trade Balance Effects on Economic Growth: Evidence from European Union Countries

Economies ◽  
2020 ◽  
Vol 8 (3) ◽  
pp. 54
Author(s):  
Deimante Blavasciunaite ◽  
Lina Garsviene ◽  
Kristina Matuzeviciute
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Trade Balance ◽  
Fixed Effects ◽  
Negative Impact ◽  
Trade Deficit ◽  
Multivariate Regression Analysis ◽  
The European Union ◽  
Linear Effect ◽  
The Impact

A growing number of recent research analyse the trade balance impact on economic growth. However, ambiguous results of studies imply the need for the research as the deteriorating trade balance hinders economic growth. This research aims to investigate the impact of the trade balance on economic growth as well as to evaluate it during the periods of trade deficit. Our estimations are based on the European Union (EU) 28 countries panel data over the period of 1998–2018, using the OLS method of multivariate regression analysis with fixed effects and focusing on two strategies: (i) including all trade balance periods, and (ii) adding deficit dummy variable seeking to evaluate whether during deficit periods we can find different and significant effect on economic growth. Evaluating all trade balance periods, the obtained results indicate the negative and lagging impact of the trade balance on economic growth, and no significant differences of the impact were identified during the deficit periods. The deterioration of trade balance reduces average economic growth and from linear relationship evaluation, we can state that it does not matter whether it starts from trade deficit or surplus result. The results obtained may also obscure the possibility of a non-linear effect, which would suggest a stronger negative impact on economic growth when the trade balance deteriorates in the presence of a large trade deficit. When discussing directions for further research it would make sense to consider other factors, such as the size of the deficit and its permanence.

scholarly journals Saldo Comercial De Productos Por Habitante De México, 2001-2014. Un Comparativo Con La Región APEC

2016 ◽  
Vol 12 (16) ◽  
pp. 248
Author(s):  
Antonio Favila Tello ◽  
América Ivonne Zamora Torres
Keyword(s):  
International Business ◽  
Automotive Industry ◽  
Trade Balance ◽  
Trade Deficit ◽  
The Other ◽  
Us Economy ◽  
The Us ◽  
Per Capita ◽  
Extractive Economies ◽  
Constant Prices

Trade balance per capita is one of the international trade indicators that experts frequently use to evaluate a country’s performance in trade and evaluate its commercial policies. Exports, imports and the trade balance per capita of the 21 APEC countries were calculated for the 2001-2014 period in order to observe and evaluate its recent evolution, especially for the Mexican case. The data used only covered merchandises according to their value in US dollars at constant prices of 2014. Results suggest the existence of trade surpluses in extractive economies such as Brunei, Papua New Guinea and Russia. The exponential growth of exports from Vietnam and China is also demonstrated as well as the outstanding international business activity in Singapore and Hong Kong (which in per capita indicators outweighed all of the other members of APEC). Conditions of trade deficit are detected for powerful economies such as United States and Japan. On the other hand, Mexico shows a balanced condition in this indicator, an important and growing automotive industry and a noteworthy dependence on the US economy.

scholarly journals Different Approaches to Merchandise Trade Balance in Pakistan

2020 ◽  
Vol 12 (Number 2) ◽  
pp. 19-30
Author(s):  
Yousuf Aboya ◽  
Arsalan Hussain ◽  
Rohail Hassan ◽  
Hassan Mujtaba Nawaz Saleem ◽  
Aamir Hussain Siddiqui
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Trade Deficit ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
Long Run ◽  
Effective Exchange ◽  
Short Run ◽  
Merchandise Trade ◽  
Effective Exchange Rate

The current study empirically examines the three major approaches to trade balance for Pakistan by utilizing the yearly data from 1972 to 2016. Monetary, elasticity, and absorption approaches were tested by developing a model that incorporates all three approaches. The significant contribution of the study is that it uses only the merchandise trade deficit account, which includes trade of only physical goods. The study used time-series data; therefore, variables have been tested for the stationarity, and it is found that there is a combination of I (0) and I (1) variables, so ARDL bounds testing approach to co-integration has been employed to find the short run and long run associations among the variables. The bound test results discovered that there is a presence of stable long-term association among the merchandise trade deficit account, real broad money supply, real effective exchange rate, and real domestic absorption. The results further revealed that merchandise trade discrepancy is determined purely by the real effective exchange rate, which specifies that the exchange rate's devaluation increases the deficit in the long run whereas in the short-run increase in domestic absorption decreases the merchandise trade deficit.

Remittances and Economic Growth

2020 ◽  
pp. 325-343
Author(s):  
Mustafe Pllana ◽  
Aida Tmava
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Aggregate Demand ◽  
Trade Deficit ◽  
Financial Capital ◽  
Foreign Direct Investments ◽  
Per Capita Gdp ◽  
Goods And Services ◽  
Multiplicative Effect ◽  
Per Capita

Economic growth has become an important study growth matter. By economists economic growth is defined as capital stock growth, rising per capita GDP, increased access for manufactured goods and services for consumption and so on. In economic growth affect several factors and policies. Corruption, lack of investment, inappropriate institutions, inappropriate education etc. are some of obstacles to economic development. Consumption and investment are important components of aggregate demand with multiplicative effect in development. Remittances of migrants are significant potential financial capital used for investments, reflected in economic development and social prosperity. Remittances in Kosovo since 1960 have always been increasing. Participation of remittances to GDP in Kosovo in 2010 is about 12%. Remittances are the highest contributor to the Kosovo trade deficit coverage and are higher than foreign direct investments. Remittances unfortunately for various reasons are not exploited and are not sufficiently exploited for economic development.

scholarly journals Impact of Trade Liberalization on Economic Growth of Nepal

2019 ◽  
Vol 8 ◽  
pp. 136-148
Author(s):  
Ramesh Bahadur Khadka
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Gross Domestic Product ◽  
Trade Liberalization ◽  
World Bank ◽  
Trade Balance ◽  
Trade Openness ◽  
Domestic Product ◽  
Total Trade ◽  
The Impact

Trade openness has been considered as an important determinant of economic growth. It has been witnessed during the past couple of decades that international trade openness has played a significant role in the growth process of both developed and developing countries. International organizations such as Word Trade Organization, International Monetary Fund and World Bank are constantly advising, especially developing countries, to speed up the process of trade liberalization to achieve high economic growth. In this context, this paper aims to analyze the impact of trade liberalization on economic growth of Nepal. For this purpose, all the data regarding gross domestic product, export, import, total trade, trade balance of Nepal from 1980 A.D. to 2013 A.D. published by World Bank (2014) were used. Both descriptive as well as inferential statistics were used to analyze the data. Correlation analysis was used to find the correlation between the selected variables. Multiple linear regression analysis was carried out to analyze the impact of the trade liberalization in economic growth of Nepal. Trade cost does not explain any influence in gross domestic product, export, import, total trade and trade balance. The impact of trade openness is positive for all variables except trade balance. Trade openness has influenced economy significantly; import increased with purchasing power, export also increased but service only. Therefore, there is gap in export and imports.

scholarly journals Growth Effect of Public Debt: The Role of Government Effectiveness and Trade Balance

Economies ◽  
2018 ◽  
Vol 6 (4) ◽  
pp. 62 ◽  
Author(s):  
Mindaugas Butkus ◽  
Janina Seputiene
Keyword(s):  
Trade Balance ◽  
Turning Point ◽  
Institutional Quality ◽  
Trade Deficit ◽  
Threshold Level ◽  
Optimal Level ◽  
Growth Effect ◽  
Role Of Government ◽  
Government Effectiveness

A growing number of recent works support the idea of debt threshold level (turning point), above which debt starts reducing economic growth. However, estimated threshold varies sharply across studies and gives a little insight into what the optimal level of debt is. The point is that there is no single turning point that could be applied to all countries and a proper investigation is needed on factors, which shape the debt impact on growth. This study aims to investigate whether debt threshold level depends on government effectiveness (one of the aspects of countries’ institutional quality) and trade balance. Our SYS-GMM estimates (and alternatively OLS and LSDV for robustness check) are based on the unbalanced panel of 152 countries over the period of 1996–2016 and on two strategies: (i) splitting of sample into subsamples according to trade balance and government effectiveness and (ii) including debt and government effectiveness, debt and trade deficit interactions. The obtained results are in line with those which confirm inverted U-shaped debt-growth relationship with clear debt turning point dependence on government effectiveness. However, effective governance is not enough to avoid the negative debt effect. Trade balance seems to be more crucial factor than institutional quality, on which threshold level depends.

scholarly journals Covid-19 pandemic and Foreign Trade: A Comparative Analysis in Indian Context

2021 ◽  
Vol 58 (1) ◽  
pp. 3334-3340
Author(s):  
Devasish Hazarika
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Foreign Trade ◽  
Trade Balance ◽  
Secondary Data ◽  
Preventive Measure ◽  
Trade Surplus ◽  
Indian Context ◽  
Before And After ◽  
Merchandise Trade

Covid-19 and lockdown as its preventive measure hit Indian Economy at a worst time. The trade performances prior to the pandemic was not satisfactory and held a decreasing trend in terms of the previous periods. In this paper an honest attempt has been made to analyse international trade as an Engine of Economic Growth, that is, its importance or significance in Economic Growth processes as well as to assess the comparative trend in international trade before and after the pandemic situation. This paper is based on secondary data. The paper is essentially a descriptive and analytical in nature. Statistical tools like graph, table etc are used for better understanding. The foreign trade is found to be diminishing in its share while analysing the data of last 10 years prior to the pandemic and nationwide lockdown. The merchandise trade surplus in June 2020 was estimated at USD 0.79 billion as against deficit of USD 15.28 billion in June, 2019. The trade balance for service is estimated at USD 6.83 on 15th July,2020. India recorded first trade surplus since January, 2002.

scholarly journals PENGARUH VARIABEL MAKRO EKONOMI TERHADAP PERTUMBUHAN EKONOMI INDONESIA TAHUN 2015-2019

2021 ◽  
Vol 2 (2) ◽  
pp. 88-99
Author(s):  
Feby Kinanda
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Unemployment Rate ◽  
Trade Balance ◽  
Inflation Rate ◽  
Short Term ◽  
Negative Effect ◽  
The Exchange Rate ◽  
Positive Effect

This study aims to analyze the effect of macroeconomic variables including the open unemployment rate, trade balance, inflation rate and the rupiah exchange rate against the dollar on Indonesian economic growth by using the ECM error correction model approach to see the long-term and short-term relationships that influence macro variables on economic growth. , in the long term the open unemployment rate variable, the trade balance, the inflation rate have a negative effect while the exchange rate has a positive effect, while in the short term the open unemployment rate, the inflation rate and the exchange rate have a negative effect while the trade balance has a positive effect.   Keywords: Economic Growth, Open Unemployment Rate, Trade Balance, Inflation, Exchange Rate

scholarly journals Integration of Mexico and Japan in the Economic Association Agreement: Its Effects on the Mexican Trade Balance during 2005-2017

2018 ◽  
Vol 04 ◽  
pp. 123
Author(s):  
José G. Vargas-Hernández ◽  
Anel Guadalupe Miranda Gutiérrez ◽  
◽  
Keyword(s):  
Trade Balance ◽  
Research Question ◽  
Trade Deficit ◽  
Development Programs ◽  
Association Agreement ◽  
Economic Association ◽  
Need Support ◽  
Economic Relationship ◽  
Economic Partnership ◽  
Partnership Agreement

This research seeks to analyze the effects of the Mexican trade balance on the basis of the Mexico-Japan Economic Partnership Agreement period 2005-2017. The research question is, What are the effects of the Mexican trade balance during the period 2005-2017 in terms of Mexico-Japan Economic Association Agreement (AAEMJ)? The research method used is empirical-analytical and documentary. It is observed that the AAEMJ has strengthened the economic relationship between both countries; however, it has a trade deficit with Japan of 12 million dollars, and the growth of imports is due to establishment of Japan’s foreign direct investment (FDI) in Mexico. Mexican exports need support and development programs.

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