DOCSLIB.ORG

U.S Trade Policy-Making in the Eighties

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
U.S Trade Policy-Making in the Eighties This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Politics and Economics in the Eighties Volume Author/Editor: Alberto Alesina and Geoffrey Carliner, editors Volume Publisher: University of Chicago Press Volume ISBN: 0-226-01280-8 Volume URL: http://www.nber.org/books/ales91-1 Conference Date: May 14-15, 1990 Publication Date: January 1991 Chapter Title: U.S Trade Policy-making in the Eighties Chapter Author: I. M. Destler Chapter URL: http://www.nber.org/chapters/c5420 Chapter pages in book: (p. 251 - 284) 8 U. S. Trade Policy-making in the Eighties I. M. Destler 8.1 Introduction As the 1970s wound to a close, Robert Strauss, President Jimmy Carter’s Special Trade Representative, won overwhelming congressional approval of the Tokyo Round agreements. This was a triumph of both substance and polit- ical process: an important set of trade liberalizing agreements, endorsed through an innovative “fast-track” process that balanced the executive need for negotiating leeway with congressional determination to act explicitly on the results. And it was accompanied by substantial improvement in the nonoil merchandise trade balance. Both the substance of trade policy and the process of executive- congressional collaboration would be sorely tested in the 1980s. During the first Reagan administration, a mix of tight money and loose budgets drove the dollar skyward and sent international balances awry. The merchandise trade deficit rose above $100 billion in 1984, there to remain through the decade (see table 8.1). The ratio of U.S. imports to exports peaked at 1.64 in 1986, a disproportion not seen since the War between the States. The constant-dollar ratio of imports to domestic goods production-the best single measure of change in the import pressure faced by U.S. firms-shot up from 18.9 percent in 1982 to 26.0 percent in 1986 (see table 8.2), and the figure for manufuc- tured goods jumped from 23 to 34 percent (Destler and Henning 1989, 121). Such increases had no precedent in modern U.S. history. Political reaction was substantial. Had the U.S. Congress been generally I. M. Destler is professor at the School of Public Affairs, University of Maryland, where he directs the graduate program on Public Policy and Private Enterprise. He is also a visiting fellow at the Institute for International Economics. His publications include American Trade Politics: System Under Stress. The author wishes to thank Paul Baker for research assistance, and Anne Krueger, Dani Rodrik, Robert Pastor, and the editors for their helpful critical comments. 251 252 I. M. Destler Bble 8.1 U.S. Merchandise Wade, 1970-89 Billions of Current Dollars Ratios Year Exports Imports Balance MIX D e fi c itl GN P 1970 44.5 40.9 3.6 .91 ... 1971 45.6 46.6 -1.0 1.02 ,001 1972 51.7 56.9 -5.2 1.10 ,004 1973 13.9 71.8 2.1 .97 ... 1974 101 .o 104.5 -3.5 1.03 ,002 1975 109.6 99.0 10.6 .90 ... I976 117.5 124.3 -6.8 1.06 ,004 1977 123.1 151.9 -28.8 1.23 ,014 1978 144.7 176.5 -31.8 1.22 .014 1979 183.3 211.9 - 28.6 1.16 .011 1980 225.1 247.5 - 22.4 1.10 .008 1981 238.3 266.5 - 28.2 1.12 ,009 1982 214.0 249.5 -35.5 1.16 ,011 1983 206.1 271.3 -65.2 1.32 .019 1984 224.1 334.3 - 110.2 1.49 .029 1985 220.8 340.9 - 120.1 1.54 ,029 1986 224.4 367.8 - 143.3 1.64 ,034 1987 225.1 412.8 - 157.7 I .62 ,035 1988 322.0 449.0 - 127.0 1.39 .026 1989 368.9 480.2 -111.3 1.30 .021 Source: Department of Commerce, Bureau of Economic Analysis. Various years. Survey ofcur- rent Business. Nore: M = imports, X = exports. disposed toward trade protection-as often assumed in press commentary- and had its members given priority to actual impact on policy-as assumed in journalistic accounts and academic models alike-then there surely would have been a 180-degree turn in postwar U.S. trade policy. In fact, there was not. The dikes constructed over the decades to protect liberal U.S. trade pol- icy did spring some leaks, but in general they held. Congress did insist on enacting a new, omnibus trade law, but this tinkered at the margins rather than making fundamental changes. The overall policy erosion was far less than analysts and practitioners would have forecast in 1980 had they known the 12- digit trade deficits the decade would bring. There was, over the decade, a significant shift in policy emphasis. Both branches became much more aggressive in pressing for the opening of foreign markets, and, in the decade’s final year, the incoming Bush administration’s trade representative, Carla Hills, was driven to designate entire nations as unfair traders: “priority foreign countries” singled out for the “number and pervasiveness” of their “acts, policies, or practices” that impede U.S. exports (Omnibus Trade and Competitiveness Act 1988). And the “super-301’’ law that forced this action was a congressional creation. But even this was in the 253 U.S. Trade Policy-making Table 8.2 U.S. Merchandise Trade and Output, by Volume, 1970-89 Billions of Constant (1982) Dollars Percentage Year Output of Goods Imports Exports MIOutput X/Output 1970 1030.0 150.9 120.6 14.6 11.7 1971 1037.6 166.2 119.3 16.0 11.5 1972 1093.8 190.7 131.3 17.4 12.0 1973 1175.0 218.2 160.6 18.6 13.6 1974 1159.2 211.8 175.8 18.3 15.1 1975 1125.0 187.9 171.5 16.7 15.2 1976 1194.7 229.3 177.5 19.2 14.8 1977 1256.2 259.4 178.1 20.6 14.2 1978 1329.1 274.1 196.2 20.6 14.7 1979 1354.6 277.9 218.2 20.5 16.1 1980 1344.2 253.6 241.8 18.8 18.0 1981 1386.0 258.7 238.5 18.6 17.2 1982 1319.1 249.5 214.0 18.9 16.2 1983 1367.0 282.2 207.6 20.6 15.2 1984 1509.2 351.1 223.8 23.3 14.8 1985 1553.6 367.9 231.6 23.7 14.9 1986 1592.6 413.7 245.9 26.0 15.4 1987 1669.0 440.5 285.7 26.4 17.1 1988 1771.6 467.1 344.3 26.3 19.4 1989 1837.1 494.4 386.8 26.9 21.0 Source: Department of Commerce, Bureau of Economic Analysis. Various years. Survey ofcur- rent Business. Nore: M = imports, X = exports. long-standing tradition of choosing toughness on (trade-expanding) export is- sues as an alternative to toughness in imposing (trade-contracting)import con- trols. * Reinforcing support for devices such as Super-301 was a growing concern about the relative competitive position of the United States. By late in the decade, Paul Kennedy (1987) had published his unlikely best-seller, Clyde Prestowitz (1988) had brought forth a widely noticed work, entitled Trading Places: How We Allowed Japan to Take the Lead, and Robert Gilpin had con- cluded his comprehensive work of contemporary political economy by asso- ciating “many of the troubles of the world economy in the 1980s” with “the relative decline of American hegemony.” It was “not likely,” he declared, “that a liberal world economy could survive without a liberal hegemon committed to its preservation” (1987, 365). Well before this, concern about the relative position of the United States had contributed, along with the trade deficits, to an atmosphere of dissatisfac- tion with liberal trade policies and interest in “strategic” alternatives. Politi- cians were reinforced in their propensity to believe that other nations were taking advantage of us, either through unfair trade practices or through clev- 254 I. M.Destler erer and more coherent pursuit of their self-interest. Political scientists and economists (Cohen and Zysman 1987; Krugman 1986; Richardson 1990) were exploring matters of “dynamic comparative advantage” and “strategic trade policy.” Mercantilism became semilegitimate. Dissatisfaction with liberal policies (and trade outcomes) did not lead to a strong alternative consensus: in fact, the prescriptive harvest from the strate- gic trade (or dynamic comparative advantage) school of economists, political economists, and business leaders was strikingly thin. But it did increase the pressures on and from Congress and the demands on executive-branch trade policy leaders, weakening the still-persistent U. S. bias toward open-market trade policies. For an analyst of U.S. trade policy-making, therefore, one major task in reviewing the 1980s must be to explain why the system held as well as it did. To this end, this paper will challenge (in sec. 8.2) the widely held notions that members of Congress are “protectionist” and that they seek to control trade policy. The body of the paper (secs. 8.3 and 8.4) will be a recounting of the major policy events of the decade. The evidence supporting the assertions of section 8.2 will be contained therein, and summarized in section 8.5. The events to be recounted will include: The rise of traditional protectionism early in the decade. The Reagan ad- ministration ended up, in the words of then-Treasury Secretary James Baker 111, granting “more import relief to U.S.
Load more

Recommended publications
  • How Does a Surplus Affect the Formulation and Conduct of Monetary Policy?”
    Mr Meyer answers the question “How does a surplus affect the formulation and conduct of monetary policy?” Speech by Mr Laurence H Meyer, Member of the Board of Governors of the US Federal Reserve System, before the 16th Annual Policy Conference, National Association for Business Economics, Washington, D.C. on 23 February 2000. * * * This is a conference on fiscal policy, specifically on how to allocate any potential future surpluses among debt reduction, tax cuts, and spending increases. The question you and I might be asking right now is: what is a monetary policymaker doing here? You know, of course, that I always enjoy visiting with my fellow NABE members. But what contribution can I make to this important topic? My assignment is to answer this question: How do the prevailing surplus and, especially, decisions about the allocation of future potential surpluses affect the formulation and conduct of monetary policy? The best way to understand the issues involved, in my view, is through the concept of the policy mix. Using this concept will allow us to focus on the implications of alternative combinations of monetary and fiscal policies - yielding the same level of aggregate demand - for the real interest rate, the composition of output, and the current account balance. And it also will help us understand the key source of the interdependence of monetary and fiscal policy decisions. In planning my remarks today, I intended first to discuss the analytics and the politics of the policy mix and then to illustrate the power of the analysis by using it to explain some of the important features of our current experience.
    [Show full text]
  • D Quantifying the Policy Mix in a Monetary Union with National Macroprudential Policies186
    D Quantifying the policy mix in a monetary union with 186 national macroprudential policies In a monetary union, targeted national macroprudential policies can be necessary to address asymmetric financial developments that are outside the scope of the single monetary policy. This special feature discusses and, using a two-country structural model, provides some model-based illustrations of the strategic interactions between a single monetary policy and jurisdiction-specific macroprudential policies. Counter- cyclical macroprudential interventions are found to be supportive to monetary policy conduct through the cycle. This complementarity is significantly reinforced when there are asymmetric financial cycles across the monetary union. Introduction Macroprudential policy in the euro area is primarily conducted by designated national macroprudential authorities, with a central coordinating and horizontal role for the ECB – especially since the establishment of the Single Supervisory Mechanism (SSM) which granted the ECB some macroprudential powers.187 The predominantly decentralised organisation of macroprudential policy-making in the euro area reflects inter alia the still incomplete integration of national banking sectors and heterogeneous financial cycles across euro area countries. In addition, as the single monetary policy mandate is to deliver price stability over the medium term for the euro area as a whole, monetary policy may actually look through financial stability risks building up in specific market segments, jurisdictions or individual countries. Such risks could also have implications for financial stability at the area-wide level. Hence, in a monetary union setting such as the euro area, nationally oriented macroprudential policies have a role to play in ensuring financial stability for all jurisdictions and supporting monetary policy conduct through the cycle.
    [Show full text]
  • Balance Trade
    SECTION 2 • CHAPTER 4 Balance trade In this Oct. 18, 2011 photo, crew members look on as containers are offloaded from the cargo ship Stadt Rotenburg at Port Everglades in Fort Lauderdale. AP PHOTO/WILFREDO LEE oods and services trade—exports plus imports—now account for nearly one-third of overall U.S. economic Gactivity,2 meaning trade’s importance to the economy has never been greater. The United States is the world’s largest exporter,3 with exports directly supporting an estimated 9.7 million jobs.4 At the same time, the United States is also the world’s largest importer, and herein lies the problem. Over the past 30 years, our trade balance has been shifting in the wrong direction—toward more imports than exports—and reached a $560 billion deficit in 2012.5 While imports can be a boon to U.S. economic ing also carry offsetting costs, including job productivity and American living standards, losses domestically. Second, in order to pay providing consumers and business with for the imports from abroad that exceed U.S. access to a larger variety of goods and ser- exports, the U.S. economy must balance this vices at lower costs than would otherwise be trade deficit by selling assets—stocks, bonds, the case, there is also a price to pay. and other assets such as companies and real estate—to overseas purchasers. Mounting trade deficits present two key problems for the U.S. economy. First, the Our trade imbalance has resulted from a economic benefits made possible by import- number of factors.
    [Show full text]
  • Asean Statistical Yearbook 2020 Yearbook Statistical Asean Asean Statistical Yearbook 2020
    ASEAN STATISTICAL YEARBOOK 2020 ASEAN STATISTICAL YEARBOOK 2020 ASEAN: A Community of Opportunities for All ASEAN STATISTICAL YEARBOOK 2020 The ASEAN Secretariat Jakarta The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967. The Member States are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. The ASEAN Secretariat is based in Jakarta, Indonesia. For inquiries, contact: The ASEAN Secretariat Community Relations Division (CRD) 70A Jalan Sisingamangaraja Jakarta 12110, Indonesia Phone: (62 21) 724-3372, 726-2991 Fax: (62 21) 739-8234, 724-3504 E-mail: [email protected] Catalogue-in-Publication Data ASEAN Statistical Yearbook 2020 Jakarta, ASEAN Secretariat, December 2020 315.9 1. ASEAN – Statistics 2. Demography – Economic Growth – Social Indicators ISBN 978-623-6945-04-9 ASEAN: A Community of Opportunities for All The text of this publication may be freely quoted or reprinted, provided proper acknowledgement is given and a copy containing the reprinted material is sent to the Community Relations Division (CRD) of the ASEAN Secretariat, Jakarta. General information on ASEAN appears online at the ASEAN Website: www.asean.org Copyright Association of Southeast Asian Nations (ASEAN) 2020. All rights reserved. The map in this publication is only indicative and is not drawn to scale. FOREWORD The ASEAN Statistical Yearbook is one of the ASEAN Secretariat’s most established publications since it was first released in 2002. Now in its 16th edition, the ASEAN Statistical Yearbook 2020 continues to provide accurate, timely, and reliable time series data on social and economic progress in the region. The ASEAN Statistical Yearbook 2020 covers data for the period of 2010-2019 comprising of sections on ASEAN population, education, health, employment, macroeconomic performance, trade in goods and services, foreign direct investment, transport, tourism, agriculture, manufacturing, and other socio-economic indicators.
    [Show full text]
  • Intermediate Macroeconomics (Econ 300) – Spring 200 8 – Ilan Noy Practice Midterm
    INTERMEDIATE MACROECONOMICS (ECON 300) – SPRING 200 8 – ILAN NOY PRACTICE MIDTERM USE GRAPHS WHENEVER THAT IS POSSIBLE!!! 1) Based on your understanding of the AS-AD model and the IS-LM model, graphically illustrate and explain what effect an increase in government expenditures will have on the economy. a) Graph everything. In your graphs, clearly illustrate the short-run and medium-run equilibria. b) Explain (in words) why the medium-run equilibrium is different from the short-run. c) Was this increase in government expenditures neutral in the medium run? Explain. 2) Explain in detail what short run effect(s) a Fed sale of bonds will have on: (a) The money market diagram; (b) The LM curve; and (c) the IS curve. 3) Explain how the unemployment rate is calculated. In your answer, include an explanation of each of the variables used to calculate the unemployment rate. 4) Increases in the budget deficit are believed to cause reductions in investment (crowding out). Based on your understanding of the IS-LM model, will a tax cut cause a reduction in investment? Explain using a graph. 5) Use the IS-LM model to answer this question. Suppose there is a simultaneous increase in government spending and increase in the money supply. Explain what effect this particular policy mix will have on output and the interest rate. Based on your analysis, do we know with certainty what effect this policy mix will have on output? Explain using a graph. 6) Explain the difference between the GDP deflator and the CPI. Which one is a better indicator of inflation? Why? 7) Based on your understanding of the AS-AD model and the IS-LM model, graphically illustrate and explain what effect an increase in taxes will have on the economy.
    [Show full text]
  • Iran: US Concerns and Policy Responses
    Order Code RL32048 Iran: U.S. Concerns and Policy Responses Updated March 13, 2007 Kenneth Katzman Specialist in Middle Eastern Affairs Foreign Affairs, Defense, and Trade Division Iran: U.S. Concerns and Policy Responses Summary According to the Administration’s “National Security Strategy” document released on March 16, 2006, the United States “may face no greater challenge from a single country than Iran.” That perception, generated first and foremost by Iran’s developing nuclear program, intensified following the military confrontation between Iranian-armed and assisted Lebanese Hezbollah and Israel in July-August 2006. To date, the Bush Administration has pursued several avenues to attempt to contain the potential threat posed by Iran, but the Administration’s focus on preventing an Iranian nuclear weapons breakthrough — as well as on stabilizing Iraq — has brought diplomatic strategy to the forefront. The Bush Administration announced May 31, 2006, it would negotiate with Iran in concert with U.S. allies if Iran suspends uranium enrichment. However, Iran did not comply with an August 31, 2006, deadline to cease uranium enrichment, contained in U.N. Security Council Resolution 1696 (July 31, 2006). After almost four months of negotiations during which Russia and, to a lesser extent, China, argued that diplomacy with Iran would yield greater results than would sanctions, the Security Council imposed modest sanctions on trade with Iran’s nuclear infrastructure and a freeze on trade with and the assets of related entities and personalities. (Resolution 1737, passed unanimously on December 23, 2006). Iran remains out of compliance, and the international community is discussing further sanctions against Iran.
    [Show full text]
  • Three Simple Principles of Trade Policy
    Three Simple Principles ofTrade Policy Douglas A. Irwin The AEI Press Publisher for the American Enterprise Institute WAS HING TON, D. C. 1996 Distributed to the Trade by National Book Network, 15200 NBN Way, Blue Ridge Summit, PA 17214. To order call toll free 1-800-462-6420 or 1-717-794-3800. For all other inquiries please contact the AEI Press, 1150 Seventeenth Street, N.W., Washington, D.C. 20036 or call 1-800-862-5801. ISBN 0-8447-7079-5 3 5 7 9 10 8 6 4 2 ©1996 by the American Enterprise Institute for Public Policy Research, Washington, D.C. All rights reserved. No part of this publication may be used or reproduced in any manner whatso­ everwithout permission in writing from the American Enterprise Institute exceptin the case ofbriefquotations embodied in news articles, critical articles, or reviews. The views expressed in the publications of the American Enterprise Institute are those of the authors and do not necessarily reflect the views of the staff, advisory panels, officers, or trustees ofAEI. THE AEI PRESS Publisher for the American Enterprise Institute 1150 17th Street, N.W., Washington, D.C. 20036 Printed in the United States ofAmerica Contents ACKNOWLEDGMENTS v INTRODUCTION 1. A TAX ON IMPORTS Is A TAX ON EXPORTS 2 2. BUSINESSES ARE CONSUMERS Too 10 3. TRADE IMBALANCES REFLECT CAPITAL FLOWS 18 CONCLUSION 27 NOTES 29 ABOUT THE AUTHOR 31 iii Acknowledgments This is a revised version of an informal talk I gave at the American Enterprise Institute inJanuary 1996. I thankAEI President Christopher DeMuth for inviting me to write up my remarks and make them available to a broader audi­ ence, as well as for his constructive advice on the text.
    [Show full text]
  • Implications of Trends Toward Protectionism
    IMPLICATIONS OF TRENDS TOWARD PROTECTIONISM Vernon L. Sorenson Professor, AgriculturalPolicy and Trade Michigan State University Introduction Recent literature on trade policy suggests that the world has come full circle. Much is made of "the new mercantilism." The implication is that the economic liberalism which provided the basis for British leadership in trade policy during the 19th century and U.S. leader- ship during the post World War II period has come to an end. There is some truth in this assessment. But it falls short of representing a complete characterization of today's situation. In its original form mercantilism was oriented toward enhancing state wealth and power. The increasing protectionism of today, on the other hand, derives from at least two different conditions. One is through producer-oriented pressure groups within individual countries. Protectionism in this context is aimed at the welfare of groups that are affected by competition in the international market- place and who seek to influence policy to serve their own ends. This form of pressure has existed throughout history, but for a number of reasons has become more intense during the 1970s. A second condition that leads to greater protection is the search by governments for ways to deal with problems of national interest that stem from greatly expanded levels of interdependence and the increasingly direct linkages between domestic and international policy issues. Some of these issues generate a competitive relation- ship among countries as, for example, when nations unilaterally implement policies aimed at improved balance of payments, ex- pand exports to enhance economic growth, or they seek other national goals irrespective of their impact on the international trad- ing order.
    [Show full text]
  • Indonesia: the Macroprudential Framework and the Central Bank's Policy
    Indonesia: the macroprudential framework and the central bank’s policy mix Perry Warjiyo* Abstract Recent crises have clearly highlighted the importance of understanding macro- financial linkages in order to mitigate the build-up of systemic risks to financial and macroeconomic stability, and sustainable economic growth. This note describes the role of macroprudential policy as an integral part of the central bank policy mix and financial stability in Indonesia. It encompasses regulation and surveillance from a macro perspective with a focus on systemic risk. A number of macroprudential policy measures have been implemented in Indonesia, including loan-to-value (LTV) ratios, reserve requirements and a capital conservation buffer, and these have proven successful in mitigating the build-up of systemic risks to financial stability as well as strengthening monetary policy in achieving price stability. In line with the central bank’s revised mandate for combined price and financial system stability, the policy mix comprises interest rate, exchange rate, capital flow management and macroprudential elements. Our experience since 2010 shows that the current policy mix has advantages over the standard inflation targeting framework. In addition to implementing a sound macroprudential framework to promote financial stability, Indonesia has underpinned its crisis management protocol for prevention and resolution of the financial system crisis with a strong legal foundation (ie the Law on Financial System Crisis Prevention and Resolution of 2016). Keywords: central banking, policy mix, financial stability, monetary policy, macroprudential policy, crisis management JEL classification: E52, E58, H12 * Deputy Governor, Bank Indonesia. BIS Papers No 94 189 Macroprudential policy is an integral part of Indonesia’s central bank policy mix.
    [Show full text]
  • TOMEŠ - JANDOVÁ: Political Economy of Trade Policy
    TOMEŠ - JANDOVÁ: Political Economy of Trade Policy POLITICAL ECONOMY OF TRADE POLICY Zdeněk Tomeš, Monika Jandová Abstract The paper deals with an explanation of the trade policy paradox which is a contrast between international trade theory and the reality of trade policy. The vast majority of economic schools of thought have realized general benefits of free trade. The advantages of free trade have been known from economic theory for more than two centuries. However the reality of trade policy is governed by various forms of protectionism. The protectionism has spread worldwide, in both developed and developing countries. In the first chapter of this paper, we sketch out the development of international trade theory from mercantilism to current economic theory. The second part is devoted to real trade policy of the most important economic centres of the world, i.e. the EU, the United States and Japan, and developing countries as well. We illustrate a practical contravening of the generally shared theoretical approach to trade policy on these examples. The most visible protectionist examples are the CAP in the EU, antidumping laws in the USA, non-tariff barriers in Japan and open protectionism in many developing countries. We offer four possible explanations of this situation: the discrimination of foreigners, invisibility of benefit from free trade, the pressure of interest groups and the turn to rigidity. Introduction The defence of the free trade principle is an integral part of general economic theory. It is one of a few areas that almost all economists agree on. On the other hand, the reality of trade policy is completely different and even in countries with relatively liberal economic policy there are many examples of flagrant contravening of the free trade principle.
    [Show full text]
  • The Dollar and the Policy Mix: 1971
    ESSAYS IN INTERNATIONAL FINANCE NO. 85, May 1971 IIMMINIMIMINNEM THE DOLLAR AND THE POLICY MIX: 1971 ROBERT A. MUNDELL INTERNATIONAL FINANCE SECTION DEPARTMENT OF ECONOMICS PRINCETON UNIVERSITY Princeton, New Jersey This is the eighty-fifth number in the series ESSAYS IN IN- TERNATIONAL FINANCE, published from time to time by the International Finance Section of the Department of Eco- nomics of Princeton University. The author, Robert A. Mundell, is Professor of Eco- nomics at the University of Chicago. He has written many articles in the field of international finance and several books,including most recently, Man and Economics( 1968), International Economics (1968), Monetary Problems of the International Economy (with A. Swoboda, 1969), and Monetary Theory: Inflation, Interest and Growth in the World Economy (ii). The Section sponsors the essays in this series but takes no further responsibility for the opinions expressed in them. The writers are free to develop their topics as they wish. Their ideas may or may not be shared by the editorial com- mittee of the Section or the members of the Department. FRITZ MACHLUP, Director International Finance Section ESSAYS IN INTERNATIONAL FINANCE NO. 85, May 1971 111:LE:ME.MEMMII THE DOLLAR AND THE POLICY MIX: 1971 IIMEMINCOMENI ROBERT A. MUNDELL INTERNATIONAL FINANCE SECTION DEPARTMENT OF ECONOMICS PRINCETON UNIVERSITY Princeton, New Jersey Copyright © 1971, by International Finance Section Department of Economics Princeton University L.C. Card No. 70-165467 Printed in the United States of America by Princeton University Press at Princeton, New Jersey THE DOLLAR AND THE POLICY MIX: 1971 THE DEFICIT AND THE DOLLAR • A decade ago Professor Rueff characterized the American balance-of- payments deficit as a "deficit without tears." He meant that the United States could buy expensive-to-make( European) resources with cheap-to- print dollars.
    [Show full text]
  • The Impact of Trade and Tariffs on the United States FISCAL FACT Erica York No
    The Impact of Trade and Tariffs on the United States FISCAL FACT Erica York No. 595 Analyst June 2018 Key Findings • Trade barriers such as tariffs raise prices and reduce available quantities of goods and services for U.S. businesses and consumers, which results in lower income, reduced employment, and lower economic output. • Measures of trade flows, such as the trade balance, are accounting identities and should not be misunderstood to be indicators of economic health. Production and exchange – regardless of the balance on the current account – generate wealth. • Since the end of World War II, the world has largely moved away from protectionist trade policies toward a rules-based, open trading system. Post-war trade liberalization has led to widespread benefits, including higher income levels, lower prices, and greater consumer choice. • Openness to trade and investment has substantially contributed to U.S. growth, but the U.S. still maintains duties against several categories of goods. The highest tariffs are concentrated on agriculture, textiles, and footwear. • The Trump administration has enacted tariffs on imported solar panels, washing machines, steel, and aluminum, plans to impose tariffs on Chinese imports, and is investigating further tariffs on Chinese imports and The Tax Foundation is the nation’s automobile imports. leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy • The effects of each tariff will be lower GDP, wages, and employment in the at the federal, state, and local levels. We are a 501(c)(3) nonprofit long run. The tariffs will also make the U.S.
    [Show full text]