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Do recent data provide evidence that the US trade deficit will correct itself?

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  • Albert Wijeweera
  • John A. Deskins

Abstract

We use monthly data from the 23 largest US trading partners for the years 1985-2005 to examine the long-run relationship between imports and exports. Results indicate that a long-run equilibrium relationship is identifiable in most of the countries we analyse. However, the country with which the US has the largest trade deficits do not exhibit any long-run relationship, indicating that any self-correcting mechanism on the trade account is either nonexistent or slow in these cases. Further, the presence of a long-run relationship is most apparent in the countries with which the US has a trade surplus. Taken together, these results provide evidence that continued growth in the US trade deficit is likely.

Suggested Citation

  • Albert Wijeweera & John A. Deskins, 2010. "Do recent data provide evidence that the US trade deficit will correct itself?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 31-35, January.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:1:p:31-35
    DOI: 10.1080/13504850701719751
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    Cited by:

    1. Augustine C. Arize & Mohsen Bahmani-Oskooee, 2018. "Do Imports and Exports Adjust Nonlinearly? Evidence from 100 Countries," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 18(1), pages 1-30.

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