WORKING PAPER 05-11

The US Trade Deficit: A Disaggregated Perspective

by Catherine L. Mann, Peterson Institute for International Economics
and Katharina Plück

September 2005

Catherine L. MannNew estimates of US trade elasticities yield insights into the sources of the widening of the US trade deficit and help understand how global competition, exchange rate changes, and demand growth affect international trade of the United States. Estimated demand elasticities across commodity categories and trading partners imply that US consumers "saving more" could be more important to change the trajectory of the trade deficit than other industrial economies "growing more." Going forward, these new elasticities have implications for demand management and exchange rate policies.

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