External Imbalances
Conventional theory and several empirical studies state that incomes and exchange rates are the key determinants of the trade balance.
We argue that export and import composition are also key explanatory variables.
2022
Carrasco, C. A. & Tovar-García, E. D. (2022). High-tech trade as determinant of the US bilateral trade balance. Economics of Innovation and New Technology. https://doi.org/10.1080/10438599.2021.2018313
2021
Carrasco, C. A., & Tovar-García, E. D. (2021). La restricción externa de México y la composición del comercio en un enfoque bilateral. Problemas del Desarrollo, 52(204), 113–140. https://doi.org/10.22201/iiec.20078951e.2021.204.69599
2020
Carrasco, C. A., & Tovar-García, E. D. (2020). Trade and growth in developing countries: the role of export composition, import composition and export diversification. Economic Change and Restructuring. https://doi.org/10.1007/s10644-020-09291-8
Carrasco, C. A., & Tovar-García, E. D. (2020). Export Composition and the Eurozone Trade Balance in Manufacturing Goods. Romanian Journal of Economic Forecasting, 23(1), 134–150. http://www.rjef.ro/rjef/rjef1_20/rjef1_2020p134-150.pdf
2019
Tovar-García, E. D., & Carrasco, C. A. (2019). Export and import composition as determinants of bilateral trade in goods: evidence from Russia. Post-Communist Economies, 31(4), 530–546. https://doi.org/10.1080/14631377.2018.1557913
Tovar-García, E. D., & Carrasco, C. A. (2019). The Balance of Payments and Russian Economic Growth. HSE Economic Journal, 23(4), 524–541. https://doi.org/10.17323/1813-8691-2019-23-4-524-541
Carrasco, C. A., & Tovar-García, E. D. (2019). Determinantes del Balance Comercial Bilateral de México: Ingreso, Tipo de Cambio y Composición de las Exportaciones. Revista Finanzas y Política Económica, 11(2). https://doi.org/10.14718/RFYPE.2019.11.2.2203
2018
Tovar-García, E. D. (2018). Does the share of crude petroleum and natural gas in exports increase total exports? The Russian case. World Economy and International Relations, 62(6), 30–35. https://doi.org/10.20542/0131-2227-2018-62-6-30-35
We do not suggest that a persistent trade deficit is a problem per se, yet it could be potentially unsustainable for different economies.
Our findings should be useful for policymakers, reminding the relevance of high-tech industries as a key channel to find potential way outs of persistent trade deficits (if it is considered as an economic policy concern).