Foreign Borrowing in the Euro Area Periphery: The End Is Near
Current account deficits in euro area periphery countries have now largely disappeared.
Does Import Competition Improve the Quality of Domestic Goods?
Firms must produce high-quality goods to be competitive in international markets, but how do they transition from producing low- to high-quality goods?
A New Approach for Identifying Demand and Supply Shocks in the Oil Market
An oil-price spike is often used as the textbook example of a supply shock. However, rapidly rising oil prices can also reflect a demand shock. Recognizing the difference is important for central bankers.
The Exchange Rate Disconnect
Why do large movements in exchange rates have small effects on international goods prices?
China’s Impact on U.S. Inflation
U.S. import prices of consumer goods shipped from China have been moderating in recent quarters, following an upward surge of 11 percent between mid-2010 and the end of 2011.
Rebalancing the Economy in Response to Fiscal Consolidation
According to the Congressional Budget Office (CBO), under current policies the ratio of federal debt held by the public over gross domestic product—the debt-to-GDP ratio—will rise rapidly over the next decade.
What Falling Export Share Says about U.S. Export Competitiveness
The U.S. market share of world merchandise exports has declined sharply over the past decade.
Back to the Future: Revisiting the European Crisis
Recent financial developments are calling into question the future of regional economic integration.
Consumer Goods from China Are Getting More Expensive
We find that, in a sharp reversal of earlier trends, U.S. import prices for consumer goods shipped from China have been rising rapidly in recent quarters—by 7 percent between 2010:Q2 and 2011:Q1.
Would a Stronger Renminbi Narrow the U.S.‑China Trade Imbalance?
The United States buys much more from China than it sells to China—an imbalance that accounts for almost half of our overall merchandise trade deficit. China’s policy of keeping its exchange rate low is often cited as a key driver of that country’s large overall trade surplus and of its bilateral surplus with the United States. The argument is that a stronger renminbi (the official currency of China) would help reduce that country’s trade imbalance with the United States by lowering the prices of U.S. goods relative to those made in China. In this post, we examine the thinking behind this view. We find that a stronger renminbi would have a relatively small near-term impact on the U.S. bilateral trade deficit with China and an even more modest impact on the overall U.S. deficit.
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