Is the U.S. Trade Deficit Sustainable?

The United States trade deficit has hit record levels and continues to rise. Is a chronic and widening deficit sustainable or will the dollar crash, perhaps taking the economy with it? If the problem was one of "twin deficits", why has the external deficit continued to worsen even as the budget deficit narrowed to zero? If US companies are so intensely competitive, why does the external deficit persist? Does the external deficit represent protectionism abroad; will it lead to protectionism at home? This study seeks to answer these perennial questions about the trade deficit. Each chapter presents simple analytical frameworks as a basis for concise, succinct, and clear statements on each major issue. The last section of the book provides an outlook for the deficit and suggests alternative policy courses for dealing with it.Is the U.S. Trade Deficit Sustainable? is designed for the policymaker and general public who are interested in the US role in the world economy, but who need not be experts in economics. It is also suited for courses in international economics, business, and international affairs.

Catherine L. Mann, Senior Fellow, held several posts at the Federal Reserve Board of Governors (1984-87 and 1989-97), including Assistant Director and Special Assistant to the Staff Director, International Finance Division (1994-97). She was a Senior Economist on the Staff of the President's Council of Economic Advisers (1991-92), the principal staff member for the Chief Economists of the World Bank (1988-89), and a Ford Foundation Fellow at the National Bureau of Economic Research (1987). She is an Adjunct Professor at the Owen School of Management at Vanderbilt University and has also taught at the University of Chicago, Princeton University, University of Maryland, Georgetown University, Boston College, and Massachusetts Institute of Technology.