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Michael Pettis on the mechanics and politics of trade

FT Alphachat

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The Effects of a Neutral Policy on Investment

For the household sector, it tends to pressure consumption down when a country runs a current account surplus. On investment, the pressures can be a little bit tricky, but typically it raises the pressure for investment on the corporate sector. The world had a trade imbalance that was positive for growth because excess British savings were exported to the US. That import of savings caused American investment to go up.

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