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We study the association of persistent trade surpluses and earning management behavior in developing countries that sign trade agreements with developed countries, i.e., whether a coupling of nations via trade agreements results in a spillover of increased quality in accounting practices. Specifically, we assess financial reporting quality in Mexico in the years following NAFTA (as measured by earnings management). Under NAFTA, Mexico experienced persistent trade surpluses and adopted stricter regulatory standards. Using publicly listed Mexican firms, we find that the quality of earnings decreased under Mexican GAAP but improved and stabilized under IFRS. Our findings do not change when we control for the size of the trade surpluses, alternative measures of abnormal accruals, various growth measures, research and development intensity, and various measures of distress. Not only has Mexico experienced a growth in their economy under NAFTA but also an increase in earnings quality due to the transfer of accounting knowledge. [ABSTRACT FROM AUTHOR]

This paper asks whether the policy of benign neglect that the United States (U.S.) government adopted in the 1970s toward foreign purchases of U.S. dollar securities and the price of the U.S. dollar has advanced the ability of the U.S. to achieve its employment, price level, growth, and national security objectives. The dominant objective of some members of the U.S. team at Camp David in August 1971 was to secure an increase in the U.S. trade surplus. One choice for the U.S. government was to increase the U.S. dollar price of gold to $100 or $140 an ounce, much like the increase to $35 an ounce in 1934. The competing choice was to close the gold window. Some members of this team believed that this choice would facilitate the move to a flexible exchange rate arrangement and that the U.S. trade surplus would increase as the price of the U.S. dollar fell. The price of the U.S. dollar has increased since the late 1970s and the purchase of U.S. dollar securities by foreign central banks, sovereign wealth funds, mutual funds, insurance companies, pension funds, and families have meant that U.S. exports of securities have displaced U.S. exports of goods. The U.S. trade surplus morphed into a U.S. trade deficit in the early 1980s, which has increased secularly, and now is nearly four percent of U.S. GDP. U.S manufacturing employment declined from 20 million in 1980 to 13 million in 2020. The increasingly large U.S. trade deficit led to the loss of three million U.S. manufacturing jobs (ball park estimate). Hundreds of factory towns in the Northeast and Midwest were decimated by the increase in the U.S. trade deficit. [ABSTRACT FROM AUTHOR]

This research examines dynamic causality between trade surplus (TS) and exchange rate exposure (ERE), utilizing the bootstrap sub-sample rolling window test. The empirical findings indicate that there is the time-varying bidirectional causality in TS and ERE within certain sub-periods. Specifically, ERE manifests both positive and negative influences on TS. In turn, TS has a positive effect on ERE which proves the export-oriented model proposed by Bodnar et al. (2002). Furthermore, due to the complex changes in Sino-US trade policies during the trade war, ERE is still stimulated under the overall downward trend of TS. This means that the widening TS can inevitably increase ERE, which may cause more trade frictions with the US. By studying the time-varying relation between these two variables, investors can reasonably allocate assets according to the changes of TS and avoid losses caused by market panic. Policy-makers could restrict the abnormal flow of international capital and promote multilateral trade cooperation, especially in times of structural economic change, to reduce trade friction and maintain a relatively stable ERE level. [ABSTRACT FROM AUTHOR]

Due to China's trade surplus with Europe, a significant imbalance exists between east- and westbound freight traffic on the China Railway Express (CR-Express). Many trains and containers return empty to China (i.e., empty backhaul), which leads to wasted freight capacity and significant economic loss. This paper presents an innovative, passenger service-like (PSL) mode, for improving the backhaul operations of CR-Express trains. The rationale for the proposed PSL CR-Express backhaul is verified through the multiple bilateral trade surpluses that exist along the CR-Express route, with which the corresponding container freight demand of each trade pair is estimated. A programming model is built to minimize the gap between the total costs of empty and PSL backhaul, and the freight revenue of PSL backhaul by determining the routes, stations visited, and cargo that needs handling for each train at each station. The numerical results show that, under the optimal scheme, the gap is −3.186 million USD/week for the balanced backhaul trains, and that 5148 FEU of cargo and 1662 FEU of empty containers will be transported in a week. Thus, we argue the proposed mode can more effectively utilize backhaul train capacity, which facilitates the sustainable growth of the CR-Express. • The multiple bilateral trade surpluses along the CR-Express route are calculated. • Passenger service like (PSL) mode is suggested for CR-Express backhaul. • Method for urban transit network design is adopted to optimize the PSL CR-Express backhaul network. [ABSTRACT FROM AUTHOR]

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Copyright of Gazdálkodás is the property of Herman Otto Intezet Nonprofit Kft. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We build a small open economy model with the financial accelerator mechanism to investigate how currency appreciation affects trade imbalances. Contrary to speculation that currency appreciation significantly reduces trade surpluses, our analysis suggests that currency appreciation would lead to a further trade surplus increase and a reduction in output for countries holding a large amount of foreign assets and importing a high proportion of non-consumption goods, such as China. [ABSTRACT FROM AUTHOR]

As of October 2018, almost half of US imports of goods from China are subject to new US tariffs at various rates, mostly at 10% until the year-end of 2018, when the rates were scheduled to be raised to 25%. These tariff rates will prove to be prohibitive for most if not all of the US imports from China. Assuming that US imports from China will be reduced by half, the initial direct real impact on the Chinese economy may be estimated at a loss of 0.43% of GDP. If indirect effects are included, the full real impact may be estimated at a maximum loss of 1.12% of Chinese GDP. These estimated impacts are relatively small and quite manageable. There is a possibility that the scope of the US tariffs may be expanded to cover all US imports from China, in which case the full negative economic impact will be doubled, but still leaving an expected rate of economic growth in excess of 4%. The Renminbi is not likely to be significantly devalued as a result of the trade war. However, there are also longer-term underlying forces at work behind the China–US trade war – the competition for economic and technological dominance and the rise of populism, isolationism, nationalism and protectionism. It is important for China–US relations, and China's relations with the rest of the world, in particular with the European Union, Association of Southeast Asian Nations (ASEAN), Japan and Russia, to be carefully managed going forward. [ABSTRACT FROM AUTHOR]

Initiatives to promote increased financial regulation after the 2008 global meltdown muddied related symptoms, including the surge in bank loans to sub-prime borrowers caused by the sharp increase in the supply of credit. U.S. banks lent billions to sub-prime borrowers because the credit supply was much larger than prime borrowers' demand. Banks believed a massive profit opportunity existed because the cost of funds was much less than mortgage loan interest rates. A surge in cross-border investment inflows resulted from large increases in the export earnings and trade surpluses of China and the oil-exporting countries (OEC). China and the OEC could have achieved trade surpluses if there had been a comparable increase in the trade deficits of the U.S. and other industrial countries in response to dramatic increases in the prices of real estate, stocks and household wealth that led to the massive expansion of consumption spending and payments for imports. Great Britain, Ireland, Iceland, and Spain also had banking crises in 2008. Greece and Portugal had sovereign debt crises 15 months later. Each country previously had economic booms from domestic adjustments to capital account surplus increases. Some borrowers relied on money from new loans to cover interest on outstanding loans. When the money supply increase from new loans slowed, some borrowers defaulted. Asset prices imploded. Banks incurred massive losses. Many failed. Establishment of a new government credit agency is proposed to provide funds to re-capitalize U.S. banks that incurred large loan losses resulting from the asset price decline in systemic banking crises. [ABSTRACT FROM AUTHOR]