Why isn’t the US a trade-surplus economy?
Special points to highlight in this issue:
• In a well-functioning world of global trade, the US should either run a more-or-less balanced trade account or it should run persistent trade surpluses. In standard trade theory, it is the norm for rich, mature economies with high income levels and efficient financial systems to export excess savings, especially to faster growing, developing economies.
• When these normal trade dynamics are distorted by extremely high levels of income inequality, as they are today in the US, this tendency for the US to export excess savings should be exacerba...