{
  "id": "RS21409",
  "type": "CRS Report",
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  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
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      "id": 341833,
      "date": "2008-08-26",
      "retrieved": "2016-04-07T03:12:23.727068",
      "title": "The Budget Deficit and the Trade Deficit: What Is Their Relationship?",
      "summary": "In the 1980s expansion, the trade deficit and budget deficit moved together. This pattern re-emerged in the recession and subsequent expansion beginning in 2001. This is the opposite of what happened in the last half of the 1990s, when the budget deficit fell as a fraction of gross domestic product (GDP) and the trade deficit rose sharply as a fraction of GDP. From this experience it is clear that international capital flows, which drive the net balance of trade, do not depend solely on movements in the budget deficit. During the last half of the 1990s, real gross domestic investment rose as a fraction of real GDP. This resulted from the rise in U.S. productivity and the related rise in the real yield on U.S. assets. This drew in additional private capital from abroad. If the twin deficits theory is correct, it has an adverse implication for the efficacy of fiscal policy as a stimulus tool. It suggests that in an environment of highly mobile international capital, the effect of policy induced increases in the structural budget deficit (e.g., tax cuts) on short-run economic growth would be largely offset by increases in the trade deficit. The experience during both the 1980s and 1990s demonstrates that a large and growing trade deficit need not be an impediment to overall job creation even though it may have had an effect on the type of jobs that were created since it affected the composition of U.S. output. This report will be updated periodically.",
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    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs7215/",
      "id": "RS21409 2005-03-24",
      "date": "2005-03-24",
      "retrieved": "2005-09-20T11:05:31",
      "title": "The Budget Deficit and the Trade Deficit: What Is Their Relationship?",
      "summary": "During the last half of the 1990s, real gross domestic investment rose as a fraction of real GDP. This resulted from the rise in U.S. productivity and the related rise in the real yield on U.S. assets. This drew additional private capital from abroad. If the twin deficits theory is correct, it has an adverse implication for the efficacy of fiscal policy as a stimulus tool. It suggests that in an environment of highly mobile international capital flows the effect of policy induced increases in the structural budget deficit (e.g., tax cuts) on short-run economic growth would be largely offset by increases in the trade deficit. The experience during both the 1980s and 1990s demonstrates that a large and growing trade deficit need not be an impediment to overall job creation even though it may have had an effect on the type of jobs that were created since it affected the composition of U.S. output.",
      "type": "CRS Report",
      "typeId": "REPORT",
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      "topics": [
        {
          "source": "LIV",
          "id": "Budgets",
          "name": "Budgets"
        },
        {
          "source": "LIV",
          "id": "Economic theory",
          "name": "Economic theory"
        },
        {
          "source": "LIV",
          "id": "Balance of trade",
          "name": "Balance of trade"
        },
        {
          "source": "LIV",
          "id": "Budget deficits",
          "name": "Budget deficits"
        },
        {
          "source": "LIV",
          "id": "Economic policy",
          "name": "Economic policy"
        },
        {
          "source": "LIV",
          "id": "Trade",
          "name": "Trade"
        }
      ]
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    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs7056/",
      "id": "RS21409 2003-01-31",
      "date": "2003-01-31",
      "retrieved": "2005-09-20T11:05:21",
      "title": "The Budget Deficit and the Trade Deficit: What Is Their Relationship?",
      "summary": "During the last half of the 1990s, real gross domestic investment rose as a fraction of real GDP. This resulted from the rise in U.S. productivity and the related rise in the real yield on U.S. assets. This drew additional private capital from abroad. If the twin deficits theory is correct, it has an adverse implication for the efficacy of fiscal policy as a stimulus tool. It suggests that in an environment of highly mobile international capital flows the effect of policy induced increases in the structural budget deficit (e.g., tax cuts) on short-run economic growth would be largely offset by increases in the trade deficit. The experience during both the 1980s and 1990s demonstrates that a large and growing trade deficit need not be an impediment to overall job creation even though it may have had an effect on the type of jobs that were created since it affected the composition of U.S. output.",
      "type": "CRS Report",
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      "topics": [
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          "id": "Budgets",
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        {
          "source": "LIV",
          "id": "Economic theory",
          "name": "Economic theory"
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        {
          "source": "LIV",
          "id": "Balance of trade",
          "name": "Balance of trade"
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          "source": "LIV",
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          "name": "Budget deficits"
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        {
          "source": "LIV",
          "id": "Economic policy",
          "name": "Economic policy"
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        {
          "source": "LIV",
          "id": "Trade",
          "name": "Trade"
        }
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}