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Analysis of the Deterioration in U.S. Trade Performance [i] (March 1984)

handle is hein.congrec/cbo10391 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Rudolph G. Penner U.S. CONGRESS Director WASHINGTON, D.C. 20515 March 30, 1984 The Honorable Lawton Chiles Committee on the Budget United States Senate Washington, D.C. 20510 Dear Senator: In response to your request to identify the sources of the decline in U.S. trade performance and to estimate the shares of the deterioration originating in each source, we have developed the enclosed materials. The analysis examines the deterioration in the U.S. merchandise trade balance during the period from the middle of 1980 (when the dollar began its ascent) to the end of 1983. Calculations have been performed that attribute the decline to four major sources: the strong dollar, weak foreign economic activity, the decline in U.S. exports to several large LDCs in the wake of their debt problems, and U.S. economic activity. Given the inherent complexity of the issues and the sensitivity of the calculations to the values of the parameters employed, three sets of results have been presented. While we believe that the results of Models I and 2 come closest to the mark, we would caution against overemphasizing any particular set of calculations. Rather, the results are indicative of the relative contributions of the four sources that have been most important for U.S. trade performance. Sincerely, Rudolph G. Penner Enclosure cc: Honorable Pete V. Domenici