Trade Balance

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Trade Balance

J-Curve and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of J-Curve: The expected adjustment path in a country’s trade balance following a currency depreciation or devaluation. Because a change in the exchange rate alters the prices of exports and imports “in the pipeline” before it affects the volume of trade, the immediate impact on the trade balance is negative (as in the downward slope of a “1”). Eventually, after the change in prices begins to affect purchasing decisions, the volume of imports and exports should move in the desired direction and the trade balance will improve (the upward slope of the “1”).

Trade Balance and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Trade Balance: The surplus deficit that results from subtracting a country’s imports from its exports during a give in period (see current account). Despite widespread misunderstanding –and the lingering political influence of mercantilism –in many countries, a trade surplus or deficit is not inherently good or bad for a country, since different situations may be involved:

* A trade surplus is the no al condition for a “mature creditor country” that provides investment capital to less developed countries. This was for many years the position of the United States, which ran persistent trade surpluses up to the early 1970s.

* However, an “unhealthy” de surplus may occur when the country is in a severe economic slump or recession n while other countries are booming (hence, exports will be strong, while imports’ weak).

* A trade deficit can occur hen a dynamic, growing country is building its capital base, with inflows of foreign capital attracted by strong investment prospects in the country .This capital account surplus must be offset by a current account deficit; in such a case, a trade deficit is a consequence of an essentially healthy economic situation.

* A deficit can, however, be “unhealthy” if it reflects a savings shortfall and borrowing from foreigners to finance current spending rather than investment.

Trade Balance and the Global Economy

Find out, in this world legal encyclopedia, additional information relating to Trade Balance and the Global Economy.

Hierarchical Display of Trade balance

European Union > European construction > EU relations > Balance of payments
European Union > European construction > EU relations > Economic analysis > Economic indicator
European Union > European construction > EU relations > Supply and demand
European Union > European construction > EU relations > Exchange policy > Exchange rate
European Union > European construction > EU relations > National accounts
European Union > European construction > EU relations > Trading operation
European Union > European construction > EU relations > Trading operation > Value of trade > Terms of trade

Trade balance

Concept of Trade balance

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Characteristics of Trade balance

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Translation of Trade balance

Thesaurus of Trade balance

European Union > European construction > EU relations > Balance of payments > Trade balance
European Union > European construction > EU relations > Economic analysis > Economic indicator > Trade balance
European Union > European construction > EU relations > Supply and demand > Trade balance
European Union > European construction > EU relations > Exchange policy > Exchange rate > Trade balance
European Union > European construction > EU relations > National accounts > Trade balance
European Union > European construction > EU relations > Trading operation > Trade balance
European Union > European construction > EU relations > Trading operation > Value of trade > Terms of trade > Trade balance

See also

  • Visible trade balance
  • Balance of visible transactions

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