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Globalization and U.S. International Trade
Cletus C. Coughlin Vice President and Deputy Director of Research Federal Reserve Bank of St. Louis Professors’ Conference – February 21, 2008 Note: The views expressed are mine and do not necessarily reflect official positions of the Federal Reserve System.
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Nominal Exports, Nominal Imports, and Nominal GDP
Figure 1 Nominal Exports, Nominal Imports, and Nominal GDP Y/Y Percent Change Nominal Imports Nominal Exports Percent Nominal GDP Source: BEA, HAVER Analytics.
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Exports Price Index, Imports Price Index, and GDP Deflator
Figure 2 Exports Price Index, Imports Price Index, and GDP Deflator 1947 – 2007 (2000=100) Imports Price Index GDP Deflator Index Exports Price Index Source: BEA, HAVER Analytics.
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Exports Price Index, Imports Price Index, and GDP Deflator
Figure 3 Exports Price Index, Imports Price Index, and GDP Deflator Y/Y Percent Change Imports Price Index Percent Exports Price Index GDP Deflator Source: BEA, HAVER Analytics.
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Richard Fisher – President, FRB Dallas
“[T]he old models simply no longer apply in our globalized, interconnected and expanded economy…By spurring productivity and fomenting tectonic economic changes, globalization has acted as a tailwind for the Fed’s – and other central banks – efforts to hold down inflation.” Source: “Coping with Globalization’s Impact on Monetary Policy,” speech at 2006 ASSA Meeting, Boston, MA, January.
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U.S. Results BIS Domestic Gap Foreign Gap Time Period
(1985 – 2005) (0.08) (1985 – 2005) (0.08) (0.09) Board (1985 – 2005) (0.087) (0.098) (1977 – 2005) (0.052) (0.087)
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Total Exports to Total Imports and
Figure 4 Price Index Ratios: Total Exports to Total Imports and Total Exports to Non-Petroleum Imports PEX/PNon-Petro IM Ratio PEX/PIM Source: BEA, HAVER Analytics.
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Real Exports, Real Imports, and Real GDP
Figure 5 Real Exports, Real Imports, and Real GDP Y/Y Percent Change Real Imports Real Exports Percent Real GDP Source: BEA, HAVER Analytics.
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Nominal Exports, Nominal Imports,
Figure 6 Nominal Exports, Nominal Imports, and Nominal (Exports + Imports) as a % of GDP 1947 – 2007 EX+IM/ GDP IM/GDP Percent EX/GDP Source: BEA, HAVER Analytics.
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U.S. Balance on Trade as a % of GDP
Figure 7 U.S. Balance on Trade as a % of GDP 1960 – 2006 Percent Source: BEA, HAVER Analytics.
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Figure 8 U.S. Balance on Trade 1960 – 2006
$ Millions Source: BEA, HAVER Analytics.
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U.S. Balance on Trade in Goods
Figure 9 U.S. Balance on Trade in Goods 1960 – 2006 $ Millions Source: BEA, HAVER Analytics.
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Figure 10 U.S. Balance on Services 1960 – 2006
$ Millions Source: BEA, HAVER Analytics.
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Nominal Trade-Weighted Exchange Value of US$ vs. Major Currencies,
Figure 11 Nominal Trade-Weighted Exchange Value of US$ vs. Major Currencies, Jan 2003 – Jan 2008 Monthly Averages Avg, 3/73=100 Source: Federal Reserve Board, HAVER Analytics.
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Real Exports and Real Imports as a % of Real GDP
Figure 12 Real Exports and Real Imports as a % of Real GDP 1947 – 2007 IM/GDP EX/GDP Percent Source: BEA, HAVER Analytics.
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Agricultural Exports Price Index, Non-Ag Exports Price Index,
Figure 13 Agricultural Exports Price Index, Non-Ag Exports Price Index, and Services Exports Price Index 1968 – 2007 (2000=100) Agricultural Goods Services Non-Ag Goods Index Source: BEA, HAVER Analytics.
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Agricultural Exports Price Index, Non-Ag Exports Price
Figure 14 Agricultural Exports Price Index, Non-Ag Exports Price Index, and Services Exports Price Index 1968 – 2007 Y/Y Percent Change Agricultural Goods Percent Services Non-Ag Goods Source: BEA, HAVER Analytics.
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Figure 15 Real Agricultural Exports, Real Non-Ag Exports, and Real Services Exports 1968 – 2007 Y/Y Percent Change Agricultural Goods Non-Ag Goods Percent Services Source: BEA, HAVER Analytics.
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Petroleum Goods Imports Price Index, Non-Petro Goods Imports Price
Figure 16 Petroleum Goods Imports Price Index, Non-Petro Goods Imports Price Index, and Services Imports Price Index 1968 – 2007 (2000=100) Petroleum Goods Index Services Non-Petro Goods Source: BEA, HAVER Analytics.
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Petroleum Goods Imports Price Index, Non-Petro Goods Imports Price
Figure 17 Petroleum Goods Imports Price Index, Non-Petro Goods Imports Price Index, and Services Imports Price Index 1968 – 2007 Y/Y Percent Change Petroleum Goods Index Non-Petro Goods Services Source: BEA, HAVER Analytics.
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Non-Petro Goods Imports Price Index and Services Imports Price Index
Figure 18 Non-Petro Goods Imports Price Index and Services Imports Price Index 1968 – 2007 Y/Y Percent Change Index Non-Petro Goods Services Source: BEA, HAVER Analytics.
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Figure 19 Real Petroleum Imports, Real Non-Petro Imports, and Real Services Imports 1968 – 2007 Y/Y Percent Change Petroleum Goods Non-Petro Goods Percent Services Source: BEA, HAVER Analytics.
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Export Shares (Nominal Terms):
Figure 20 Export Shares (Nominal Terms): Agricultural Exports, Non-Ag Exports, and Services Exports 1967 – 2007 Non-Ag Goods Percent Services Agricultural Goods Source: BEA, HAVER Analytics.
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Export Shares (Real Terms):
Figure 21 Export Shares (Real Terms): Agricultural Exports, Non-Ag Exports, and Services Exports 1967 – 2007 Non-Ag Goods Percent Services Agricultural Goods Source: BEA, HAVER Analytics.
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Import Shares (Nominal Terms):
Figure 22 Import Shares (Nominal Terms): Petroleum Imports, Non-Petro Imports, and Services Imports 1967 – 2007 Non-Petro Goods Percent Services Petroleum Goods Source: BEA, HAVER Analytics.
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Import Shares (Real Terms):
Figure 23 Import Shares (Real Terms): Petroleum Imports, Non-Petro Imports, and Services Imports 1967 – 2007 Non-Petro Goods Percent Services Petroleum Goods Source: BEA, HAVER Analytics.
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Manufacturing and Private Services Employment
Figure 24 Manufacturing and Private Services Employment as a % of Total Employment 1948 – 2006 Private Services Percent Manufacturing Source: BEA.
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Value Added by Industry:
Figure 25 Value Added by Industry: Manufacturing and Private Services as a % of GDP 1947 – 2006 Private Services Percent Manufacturing Source: BEA.
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Real Value Added by Industry:
Figure 26 Real Value Added by Industry: Manufacturing and Private Services as a % of GDP 1987 – 2006 Private Services Percent Manufacturing Source: BEA.
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Chain-Type Price Indexes for Value Added:
Figure 27 Chain-Type Price Indexes for Value Added: Manufacturing and Private Services 1947 – 2006 (2000=100) Private Services Manufacturing Index Source: BEA.
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U.S. Exports – Industrial vs. Developing Countries
Figure 28 U.S. Exports – Industrial vs. Developing Countries 5+ Year Averages 58% 63% 58% 36% 40% 41% China 4% China 4% India 2% China 4% India 2% India 1% FSU 2% FSU 2% FSU* 3% *Former Soviet Union 54% 56% 46% 43% China 9% China 5% India 2% India 1% FSU 2% FSU 1% Source: IMF Direction of Trade Statistics Yearbooks.
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(5+ year averages ranked by $ of exports)
Table 1 Top 10 U.S. Export Partners (5+ year averages ranked by $ of exports) Canada Japan Mexico United Kingdom Germany Netherlands Saudi Arabia France Korea Belgium Canada Mexico Japan United Kingdom China Germany Korea Netherlands France Singapore Source: IMF Direction of Trade Statistics Yearbooks.
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U.S. Imports – Industrial vs. Developing Countries
Figure 29 U.S. Imports – Industrial vs. Developing Countries 5+ Year Averages 58% 62% 57% 39% 40% 43% China 5.5% China 2.4% India 1.7% China 12.4% India 1.7% India 1.7% FSU <1% FSU <1% FSU* <1% *Former Soviet Union 47% 53% 53% 47% China 24% China 16.4% India 2.0% India 1.9% FSU <1% FSU 1.7% Source: IMF Direction of Trade Statistics Yearbooks.
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(5+ year averages ranked by $ of imports)
Table 2 Top 10 U.S. Import Partners (5+ year averages ranked by $ of imports) Canada Japan Mexico Germany Taiwan United Kingdom Korea France Hong Kong Italy Canada China Mexico Japan Germany United Kingdom Korea Taiwan France Venezuela Source: IMF Direction of Trade Statistics Yearbooks.
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Figure 30 U.S.-China Bilateral Trade Deficit 1978 – 2007
$ Millions of Dollars Per Year: U.S. Net Exports Source: U.S. Census Bureau, HAVER Analytics.
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U.S.-China Bilateral Trade Deficit &
Figure 31 U.S.-China Bilateral Trade Deficit & U.S. Trade Deficit 1978 – 2007 U.S.-China Bilateral Trade Deficit $ Million U.S. Trade Deficit Source: U.S. Census Bureau, HAVER Analytics.
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China’s Portion of the U.S. Trade Deficit
Figure 32 China’s Portion of the U.S. Trade Deficit 1978 – 2007 Percent Source: U.S. Census Bureau.
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Share of U.S. Goods Imports from China
Figure 33 Share of U.S. Goods Imports from China Percent Source: U.S. Census Bureau.
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Share of U.S. Goods Imports from the Pacific Rim:
Figure 34 Share of U.S. Goods Imports from the Pacific Rim: China vs. Pacific Rim (ex China) Percent Source: U.S. Census Bureau.
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Concluding Comments U.S. trade Implications for U.S. monetary policy
Trade/GDP Trade Prices – rapid in 70s, relatively slow in 80s and 90s, faster than GDP deflator recently Exports of non-agricultural goods have increased as fast as exports of services Real manufacturing output/GDP constant Geographic pattern of trade shifting to developing counties China increasingly important – problem? Implications for U.S. monetary policy International sector increasingly important for U.S. economic activity Models based on foreign output gaps of dubious value Negligible exchange-rate pass-through for U.S.
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