Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Spain cuts its trade deficit the hard way
European shares hit new highs a few days ago on the news that Spain's trade deficit was down 31.2% in June compared to June a year earlier. How did Spain do it? The chart below gives a clue:
According to tradingeconomics.com. The Spanish unemployment rate is now 24.6%. It's easy to wipe out a trade deficit, all you need to have is employment that is high enough to drive down wages and purchases of imports.
There are alternatives, such as our invention, the Scaled Tariff. Or Spain could exit the eurozone so that its currency could drop toward a trade balancing level. Spain is doing it the painful way.
Journal of Economic Literature:
Atlantic Economic Journal: