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TrumpEconomics: A World View

Paper Session

Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM

Pennsylvania Convention Center, 201-A
Hosted By: Society of Policy Modeling & American Economic Association
  • Chair: Dominick Salvatore, Fordham University

Economic Consequences of Protectionism in the United States

Kaushik Basu
,
Cornell University

Abstract

Analyzing the economic consequences of Donald Trump lies is a challenge because Trump does not represent a consistent ideology in the way that Reagan or Roosevelt did. His policy package lacks coherence. However, the one theme that has been consistently present is that of a certain kind of protectionism, that will be referred to as xeno-protectionism, marked by walls of tariffs and concrete, and the effort to cut off of the flow of people and human capital into the US. This paper will analyze the economic consequences of US xeno-protectionism both for the US and for other countries in the world. It will be argued that this will give the US a short-term high and then cause a deep and protracted slowdown. The fall-out on other countries will also be negative in the short and medium term in diverse ways. The paper will analyze the effect of Trump on several countries and argue that for China, India and Mexico the long-run may bring some unexpected benefits from Trump.

Cross-Atlantic Implications of the New United States Policy Mix

Marco Buti
,
European Commission

Abstract

The contribution will assess implications of shifting policy mix in the US for global imbalances and adjustment in the Eurozone. The new policy mix emerging in the United States, combining announcements of looser fiscal policy with a progressively tighter monetary stance, will have potentially large repercussions on long-run interest rates and exchange rates. This will have consequences for the adjustment in emerging markets (through a negative impact on financing conditions), as well as in advanced economies, including the Eurozone countries. The contribution will also underline the importance of vigorously pursuing the three-pronged strategy of complementing supportive monetary policy with appropriate fiscal stimulus and ambitious structural reforms. Finally, it will discuss the potential of G20/G7 to promote a coordinated policy approach that would effectively address the risk of re-emergence of global imbalances. In particular, to what extent the G20/G7 can deal with the transition from crisis management to the handling of heterogeneous preferences among the policy makers.

Trump Economics and United States/China Trade Imbalances

Justin Jifu Lin
,
Peking University
Xin Wang
,
Peking University

Abstract

China was US’s largest trading partner in 2016 with a total trading volume of US$578.6 billion. China was also US’s largest source of trade imbalances with US$ 347 billion in China’s favor in the same year. In his election campaign, Trump blamed China for stealing jobs from the US, threatened to name China as a currency manipulator, and planned to charge 45% of border tax on imports from China. In this paper we will analyze the causes of US-China trade imbalances and argue that US has had trade imbalances with East Asia’s newly industrialized economies since the 1950s, the imbalances largely reflected the differences in comparative advantages and a border tax on China’s imports will not reduce the US’s overall imbalances and increase US’s jobs.

United States Economy: Leading or Just One in the Global Pack?

Catherine L. Mann
,
OECD

Abstract

The US economy has exhibited an earlier return to close to full employment and price stability relative to other major advanced countries and regions. Does this imply that the US will take on its standard role of being the global locomotive? Or has that role been passed to other countries, for example China. Are disconnects between the indicators of real activity and financial market pricing being resolved, or not.
Discussant(s)
Dominick Salvatore
,
Fordham University
JEL Classifications
  • F6 - Economic Impacts of Globalization
  • E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook