The Persistence of the U.S. Trade Deficit: An Open-Economy Macroeconomic Analysis with Microeconomic Foundations

CoverImage9780984491919

Title:                            The Persistence of the U.S. Trade Deficit: An Open-Economy Macroeconomic Analysis with Microeconomic Foundations
Author:                       Peter C. Dawson, Ph.D.
Date Published:          July 20, 2012.
Publisher:                   Peter C Dawson Publishing, Ridgefield, Connecticut, USA.
Binding:                      Hardcover.
Pages:                          128.
ISBN:                           9780984491919.
Edition:                       First Edition.

Available at many local and online bookstores. List price = $35.00. Competitive retail price = $16.00 to $25.00.

About the book:

     The Persistence of the U.S. Trade Deficit: An Open-Economy Macroeconomic Analysis with Microeconomic Foundations (2012) [1] is an academic text in International Economics, which discusses the potential macroeconomic and microeconomic causes of the persistent U.S. trade deficit so long after the 1985 U.S. dollar depreciation in foreign exchange markets that should have made U.S. goods more price competitive in world markets relative to foreign goods.  This book provides a synthesis of several potential microeconomic and macroeconomic causes of the persistent U.S. trade deficit into one general, open-economy macroeconomic model, which is a modified Mundell-Fleming model.  It makes a good reader for students and researchers in the areas of International Trade and International Finance (i.e., Open-Economy Macroeconomics), but it also is written in descriptive detail such that it is accessible and understandable to a broad readership (even if one skips the mathematics).  Policy-makers may gain some perspective on the importance of balanced government budgets, policy incentives for private saving, the relative competitiveness of U.S. firms—and U.S. workers, and the national income and wealth benefits of a sound trade promotion policy.

     [1] This book is not to be confused with Paul Krugman and Richard Baldwin’s 1987 paper titled The Persistence of the U.S. Trade Deficit, which is prominently cited in the book.

Practical Application (for teachers and students):

  • Tesla Motors’ Distribution Strategy.  An example of how improved respect for consumers and eliminating an unnecessary layer of distribution profit can help a company become more competitive in world markets, i.e., with respectful sales experience and lower retail sales prices.  In addition, Tesla would like customers to order directly, thus eliminating the costs of holding inventory, thereby allowing it to lower retail sales prices even further.
  • U.S. Information Superhighway: An Unfulfilled Promise.  An example of how legislative compromise,
    fueled by industry lobbying, can distort a policy into ineffectiveness (or less effectiveness).