With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and...

We provide a theoretical interpretation of two features of international data: the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in the terms of trade, but positively correlated with past movements....

I examine the evolution of the Japanese trade balance and its relation to the terms of trade and the value of the yen. Using a vector time series model, I predict that the trade surplus will fall from a high of 3.7 percent of GNP in late 1992 to about 2.6 percent in 1995. This relatively modest...