The Peterson Institute for International Economics will host an exclusive discussion titled "International Imbalances Again? Still? Forever?" examining the persistence, drivers, and policy implication...

Global current account imbalances widened in the past two years, led by growing surpluses in China and deficits in the United States. Most forecasters expect imbalances to stabilize or even narrow in ...

This event revisits and expands on themes from PIIE’s spring discussion, “Does changing the trade regime change the dollar regime? To Mar-a-Lago and beyond.” Against the backdrop of shifting trade pol...

Who profits in a post-American world?

The Federal Reserve’s September 16-17 policy meeting may well be one of the most contentious in years. Although financial market investors see a 25 basis point interest rate cut as close to a lock, so...

The United States has run significant external deficits for half a century and the associated net international liabilities have been growing, especially recently. Yet, in contrast to earlier periods ...

A rough consensus has evolved around the causes of the COVID-era inflationary spike: the disruption in supply chains; the shift in demand from services to goods; the surge in commodity prices that fol...

On March 5, US President Donald Trump addressed Congress, opening his speech with the statement, "America is Back." During his address, Trump asserted that other nations have long imposed tariffs on ...

The Peterson Institute for International Economics (PIIE) is an independent nonprofit, nonpartisan research organization dedicated to strengthening prosperity and human welfare in the global economy through expert analysis and practical policy solutions.

US presidents traditionally avoid even the appearance of meddling with monetary policy

On March 31, President Donald Trump ordered a study of the causes of the US trade deficit that will focus on trade barriers and unfair trade practices in foreign countries. Economists, however, broadly agree that trade barriers do not cause trade deficits. A country can have a trade deficit only if it is borrowing on net from the rest of the world. Trade barriers have only minor effects on borrowing and lending decisions.

President Donald Trump launched a trade war to eliminate the longstanding US trade deficit. But the trade deficit has only grown on his watch because tariffs were the wrong policy choice. Trade deficits are not always a bad thing, but a wealthy country like the United States should not run a perpetual deficit. Decades of US trade deficits have piled up debt that makes future generations of Americans less well off, as they must pay interest and dividends to foreigners.

A 2017 PIIE analysis found that fiscal balances and foreign exchange intervention—more broadly, government purchases of foreign assets to influence exchange rates—are the most important factors behind differences in current account balances across countries and over time. The current account is the broadest measure of a country's balance of trade. It records all income received from foreigners and payments made to foreigners.

January 20, 2025 MEMORANDUM FOR THE SECRETARY OF STATE THE SECRETARY OF THE TREASURY THE SECRETARY OF DEFENSE THE SECRETARY OF COMMERCE THE SECRETARY OF

The speed of both the rise and fall of US inflation in 2021–23 took many economists by surprise. This paper shows that the rise of COVID era inflation reflects three independent shocks: a plethora of pandemic-related shifts in demand patterns and supply disruptions; the largest commodity price surge in 40 years caused by the Ukraine war; and strong monetary and fiscal responses to the pandemic, which kept labor markets tight. The authors document the transmission of these shocks through the main components of private consumption: durable goods, nondurable goods, and services.