The existing explanations for President Trump’s decision to trigger a trade war with most of America’s trading partners are not sufficient.The less explored motivation,we argue,is to raise income for the federal gov...The existing explanations for President Trump’s decision to trigger a trade war with most of America’s trading partners are not sufficient.The less explored motivation,we argue,is to raise income for the federal government through tariffs in order to balance the surging fiscal deficit caused by Trump’s bold tax cut policy since December 2017.The repeated increase in interest rates by the Federal Reserve throughout 2018 is leading to sharp increase in the cost of servicing America’s US$21 trillion and growing debt,which means that debt servicing would soon become the biggest outlay of the US government.This new explanation implies that the US will need additional sources of income like tariffs in order to balance its budget,and tariffs on Chinese products is viewed as a main source of such income.China should,therefore,rethink its strategy in seeking a resolution for the trade war.展开更多
From the 1970s, the global currency system has two features： the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points ...From the 1970s, the global currency system has two features： the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points out that the costs of the dollar＇s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, the termination of the U.S. obligation to redeem its currency for gold also removed an important restraint on deficit financing for the US and many other countries in the short-run, thus promoting excessive leverage that was a major contributor to the 2008 financial crisis. The paper suggests replacing several main countries＇ currencies in international reserves with a real Special Drawing Right （SDR） issued according to currency board rules.展开更多
基金This study was financially supported by the Ministry of Education of the People’s Republic of China.
文摘The existing explanations for President Trump’s decision to trigger a trade war with most of America’s trading partners are not sufficient.The less explored motivation,we argue,is to raise income for the federal government through tariffs in order to balance the surging fiscal deficit caused by Trump’s bold tax cut policy since December 2017.The repeated increase in interest rates by the Federal Reserve throughout 2018 is leading to sharp increase in the cost of servicing America’s US$21 trillion and growing debt,which means that debt servicing would soon become the biggest outlay of the US government.This new explanation implies that the US will need additional sources of income like tariffs in order to balance its budget,and tariffs on Chinese products is viewed as a main source of such income.China should,therefore,rethink its strategy in seeking a resolution for the trade war.
文摘From the 1970s, the global currency system has two features： the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies. This paper points out that the costs of the dollar＇s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, the termination of the U.S. obligation to redeem its currency for gold also removed an important restraint on deficit financing for the US and many other countries in the short-run, thus promoting excessive leverage that was a major contributor to the 2008 financial crisis. The paper suggests replacing several main countries＇ currencies in international reserves with a real Special Drawing Right （SDR） issued according to currency board rules.
