Current Issues in Economics and Finance
The Effects of a Booming Economy on the U.S. Trade Deficit
February 2001 Volume 7, Number 2
JEL classification: F4, E3

Authors: Stefan Papaioannou and Kei-Mu Yi

The robust growth of the U.S. economy between 1996 and 1999 spurred U.S. demand for foreign goods and contributed to a surge in the U.S. trade deficit. An analysis of the effects of the expansion on the trade balance suggests that the economic boom can account for roughly a third of the sharp rise in the merchandise trade deficit during this period.

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