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The effects of trade deficit on output and employment: evidence from the U.S.’s economy

Tuan Le and William Baker ()
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William Baker: West Virginia Wesleyan College

International Economics and Economic Policy, 2020, vol. 17, issue 4, No 4, 877-895

Abstract: Abstract This paper investigates the effect a trade deficit has on GDP in the United States and if the effect is being lessened by the income and substitution effect. Employment will also be discussed in this paper as regression and cointegration analysis will be used to see what effect technology and the trade deficit have on employment in the manufacturing sector. The results suggest that trade deficit has a small negative effect on GDP. In addition, we find that technology advancement has more impact on employment than the trade deficit.

Keywords: Trade deficit; Consumption; Employment; Income effect; Substitution effect; F14; F66 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10368-020-00464-4

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