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Are Trade Deficits That Bad?

Robert E. Lippens
Business Economics
Vol. 32, No. 2 (April 1997), pp. 14-19
Stable URL: http://www.jstor.org/stable/23487791
Page Count: 6
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Are Trade Deficits That Bad?
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Abstract

This article evaluates an assortment of economic thought concerning the value of a trade deficit. In a micro, or perhaps sectoral sense, some trade practices that could cause trade deficits are bad. History has judged other societal trade practices as adverse to trading partners at best and inimical to civilization at worst. The paper then introduces a framework for evaluating claims of bad and good trade deficits, those that emanate from voluntary financial transfers, in the macro environment. It also offers a fresh disaggregation of the National Income and Product Accounts, a middle ground to the debate. The concluding section discusses the burden of a trade account deficit.

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