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Richmans' Trade and Taxes Blog
Trade Deficits and Unemployment
Jesse Richman, 5/3/2013
Trade deficits usually have a pernicious effect on employment. As Figure II-2 below shows, the average unemployment rate in 2011 for countries that had a current account deficit in 2000 was much higher than for countries that had a current account surplus in 2000. Countries that borrowed and spent later suffered when the loans came due.
For the 65 countries covered in the figure (all of the countries available on tradingeconomics.com for these particular years of data), the 2011 unemployment rate was nearly twice as large (10.7 versus 5.9) in countries that had a current account deficit in 2000 (t = 3.4, p<.0.001).
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- Levy Economics Institute's analysis of Import Certificates to balance trade
- US wins WTO appeal on China's non-tariff barriers against US movies, music, and games
- Prof. Krugman and Chinese Mercantilism
- China agrees to modify export subsidies
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