Document Type
Article
Abstract
The U. S. is facing an unprecedented environment of increasing unemployment, declining income, disappearing middleclass, and mounting trade deficit (about $731 billion in 2007). The government is providing stimulus funds to a selected number of organizations to help solve these problems.
However, as long as the country continues to have huge trade deficits, these stimulus efforts may not help much, if at all. They may even worsen the economic situation. This could happen if the banking, insurance, construction, transportation, and other companies—receiving the stimulus funds—would offshore part of their production activities. Several American firms send certain number of jobs abroad on a regular basis. To continue to do so in the current tougher times would be only natural. There is no condition in the stimulus packages that would keep them from doing so. “Buy American” slogans may not much help persuade American consumers to buy the American products when, instead, they can go for the less expensive products made abroad.
Recommended Citation
Bhandari, Narendra C., "Futility of Stimulus Funds in the Middle of Huge Trade Deficits" (2009). Faculty Working Papers. 65.
https://digitalcommons.pace.edu/lubinfaculty_workingpapers/65
Included in
Business Administration, Management, and Operations Commons, Corporate Finance Commons, Finance and Financial Management Commons, International Business Commons, Strategic Management Policy Commons
Comments
Dr. Bhandari, who is writing a book on his theory of trade equilibrium, is a Professor of Management at Pace University, New York. His articles on this topic have been published in the proceedings of the NEBAA International Conference; the proceedings of the Academy of International Business, North East chapter, Conference; and the Proceedings of the Global Business Development Institute International Conference.
The trade data have been taken from the U.S. Department of Commerce publications.