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Co-Movement of Trade Balance and Budget Balance Exception: USA 1991-1999

Analyzing the twin deficits of the USA in the 1990s, transitioning from budget deficit to surplus while facing a growing trade deficit, questioning the impact of the Information Technology Bubble era.

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Co-Movement of Trade Balance and Budget Balance Exception: USA 1991-1999

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Presentation Transcript

  1. Twin Deficit XuHu Texas A&M University

  2. Co-movement of Trade Balance and Budget Balance

  3. Exception : year 1991 - 1999 • In 1990s, the government budget went from deficit to surplus. • In 1990s, U.S. economy experienced a long and steady expansion. • Why in this period the economy ran into more trade deficit? Especially starting from year 1997.

  4. Saving and Investment

  5. Consumption/ GDP ratio increased more rapidly during year 1997 -2000

  6. Information Technology Bubble (Dot-Com Bubble)

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