Wirtschaft und Finanzen

A different take on trade (im-) balances

A different take on trade (im-) balances Foto: Tim Easley

Rather than being a “rip-off”, trade balances between the US and the EU represent different business models, argue Matthias Diermeier, Michael Hüther and Markos Jung in their paper: “It’s business models, stupid!” for the German Economic Institute. The US runs a surplus with respect to the European Union. This is largely driven by a positive service balance and primary incomes originating from US investments abroad. Services and primary incomes overcompensate the US goods trade deficit with the EU.

Read the full paper here.

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