Current account – The Economics, Tech, Health and Culture Remix (beta)

The Exorbitant Tax Privilege

November 12, 2018 Bilal 0

The Exorbitant Tax Privilege https://ift.tt/2qGh5me The Exorbitant Tax Privilege NBER Working Paper No. 24983 Issued in September 2018 NBER Program(s):Development of the American Economy, International Finance and Macroeconomics, Public Economics We estimate and attempt to explain the evolution of the taxes paid by U.S. multinationals on their foreign profits since 1966. In the oil sector, taxes paid to oil-producing States have been contained, allowing U.S. firms to earn high after-tax returns. Foreign taxes fell abruptly after the first Gulf War. In sectors other than oil, the effective foreign tax rate has fallen by half since the late 1990s. Almost half […]

Three tariff lessons from US interwar history

October 7, 2018 Bilal 0

Three tariff lessons from US interwar history https://ift.tt/2IizJsq National tariff schedules are inevitably detailed and complex, but a broad-brushed macroeconomic picture can be painted using the ratio of custom duties collected to the value of dutiable imports. Figure 1 presents this measure from 1895 to 2000. The upper panel covers an early period of unilateral US legislative acts. The lower panel covers the period of formal multilateral trade agreements that followed – the General Agreements on Tariffs and Trade (GATT) and the WTO. Figure 1 Ad valorem equivalent tariff rate (ratio of customs duties to dutiable imports) Notes: Vertical lines are […]

Some Facts on Global Current Account Balances

September 2, 2018 Bilal 0

Some Facts on Global Current Account Balances https://ift.tt/2nia6yf I’m the sort of joyless and soul-killing conversationalist who likes to use facts as the background for arguments. In that spirit, here’s an overview of some facts about global trade balances, taken from the IMF External Sector Report: Tackling Global Imbalances and Rising Trade Tensions (July 2018). Here’s a list of the 15 countries with the largest trade surpluses and deficits, as measured by the current account balance. It also shows these magnitudes as a share of world GDP and a share of the country’s GDP (for the record, I’ve edited the […]

Trade uncertainty and investment

September 2, 2018 Bilal 0

Trade uncertainty and investment https://ift.tt/2KRXjfn My colleague Steve Davis has a nice post quantifying economic uncertainty due to the trade war, and its emerging impact on investment. Steve (and Nick Bloom) have done a great job quantifying policy uncertainty over time. To be clear, policies can have two effects — there is the certainty of damaging policy, but there is also the damaging uncertainty of what policy will be. If a trade war seems to be looming, and you don’t know if you will get tariff protection (raw steel) or be hurt by the tariff (steel users, competing with tariff-free […]

Clear Evidence of Fuzzy Thinking about Trade Deficits

September 2, 2018 Bilal 0

Clear Evidence of Fuzzy Thinking about Trade Deficits https://ift.tt/2w3XZc9 (Don Boudreaux) Tweet After explaining – and endorsing the explanation – that non-Americans’ demand to use U.S. dollars as the major global currency contributes to the U.S. running trade deficits period after period after period, Robert Samuelson offers this parenthetical disclaimer: (Note: Many economists reject this theory. The problem, they say, is that Americans want to invest more than they’re willing to save. The gap is filled by an inflow of foreign capital converted into dollars. Despite differences, both theories operate similarly. They create a demand for dollars that affects the […]

Do Import Tariffs Help Reduce Trade Deficits?

September 2, 2018 Bilal 0

Do Import Tariffs Help Reduce Trade Deficits? https://ift.tt/2nA1AuN Mary Amiti, Mi Dai, Robert C. Feenstra, and John Romalis Import tariffs are on the rise in the United States, with a long list of new tariffs imposed in the last few months—25 percent on steel imports, 10 percent on aluminum, and 25 percent on $50 billion of goods from China—and possibly more to come. One of the objectives of these new tariffs is to reduce the U.S. trade deficit, which stood at $568.4 billion in 2017 (2.9 percent of GDP). The fact that the United States imports far more than it exports is viewed by some as unfair, […]

The Current Account Counts

September 2, 2018 Bilal 0

The Current Account Counts https://ift.tt/2PcoQux Despite the US government’s recent upward revision to personal saving data, the overall national saving rate, which drives the current account, remains woefully deficient. And the major surplus countries – Germany, China, and Japan – have been only too happy to go along for the ride. NEW HAVEN – In an increasingly interconnected global economy, cross-border trade and financial-capital linkages have come to matter more than ever. The current-account balance, the difference between a country’s investment and saving position, is key to understanding these linkages. The dispersion of current-account […]