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Clarkson Professor's Study: Full National Employment And Elimination Of Trade Deficit Are Mutually Exclusive
If unemployment rates continue to drop, the U.S. can't eliminate its trade deficit, says a Clarkson University economics professor.
In a paper presented at the Fifth Post Keyenesian Workshop this summer, Professor Sonmez Atesoglu (SOON-mez Ah-TESH-a-loo) found that full employment and elimination of the U.S. trade deficit, especially with its two biggest trade rivals, Japan and Germany, are mutually exclusive.
"If we finally reach a point where everyone who wants to be employed is employed— i.e. full employment—, then our trade deficit will rise even further," says Atesoglu. Why? He says that full employment means a faster economy. A faster economy buys more imports. The trade deficit grows. On the other hand if the U.S. does reach balanced trade, unemployment will rise, according to Atesoglu's econometric analysis.