Will the "Real" Trade Balance Please Stand up?

The US has been running a deficit in its merchandise trade account for some years. Certain disparities are evident in deficit calculations that come about because of the particular method used by the US Department of Commerce to deflate trade figures in the national accounts. Exports are deflated by...

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Bibliographic Details
Published in:Journal of international business studies 1983-04, Vol.14 (1), p.155-159
Main Author: Moore, Geoffrey H.
Format: Article
Language:English
Subjects:
Balance of trade
Business and Management
Business Strategy/Leadership
Commerce
Exports
GNP
Gross National Product
Import prices
Imports
International Business
International trade
Management
Measurement
Merchandise
Net exports
Organization
Price level changes
Price levels
Purchasing power
Real
Techniques
Trade deficit
Trade deficits
Trade surplus
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Summary:The US has been running a deficit in its merchandise trade account for some years. Certain disparities are evident in deficit calculations that come about because of the particular method used by the US Department of Commerce to deflate trade figures in the national accounts. Exports are deflated by export prices and imports by import prices. This method is reasonable for measuring growth of imports or exports, but difficulty arises in taking the balance, which is what enters into the gross national product (GNP). The method used by the Commerce Department is detailed and 2 alternatives - by Edward Denison of the Bureau of Economic Analysis and Solomon Fabricant, who proposed a method in an unpublished memorandum for the National Bureau of Economic Research in 1951 - are offered. For example, in the second quarter of 1982, when the official measure of real GNP rose at an annual rate of 2.1%, both Denison's and Fabricant's methods of deflating net exports of goods and services would have produced an increase in real GNP of 2.9%.
ISSN:0047-2506
1478-6990
DOI:10.1057/palgrave.jibs.8490514