Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Research Paper:
S. income inequality has a significant effect on U.S. demand for imports. They chose vertically differentiated products to study trade and income. They found that U.S. income disparities do have a significant effect on U.S. imports using their trade model but also could offer alternative explanations for the finding.
Their main argument surrounds around the assumption that the country can domestically produce very high quality of the differentiated product while it imports low quality version of the item from other countries due to the demand in lower income groups. When we say differentiated products, it means that while the product is the same, different income groups would demand different qualities of the same item. In other words income determines quality demanded. So while the country itself has enough of the high quality version, it doesn't have the same item available in low quality and hence needs to import.
Based on their findings, the hypothesis is proven correct as they explain, "…according to our range of estimates (0.8-1.2), had inequality in the U.S. remained at its 1975 level, imports in 1996 would have been lower between 12 and 19% of the fitted value (which is close to the actual value). The further rise in inequality since 1996 implies that had inequality in 2004 been at its 1975 level, the percentage decline in U.S. imports in 2004 would have been even larger than in 1996, thus implying a very large improvement in the U.S. current account deficit."
They researchers also investigated the relationship between aggregate imports, income relative process and inequality in the long run and found them to be closely linked. They also discovered that "the influence of inequality is quantitatively very important as well."
In the second article studied for this paper, the author Imad Jabir focused on the exploration of a relationship between oil imports, GDP and domestic crude oil production. They found that increase in GDP leads to higher crude oil imports and while it was previously believed that the latter had a positive impact on the former, Jabir found that it was the other way around because higher GDP is directly connected with high oil imports. The country chooses to import more and needs to import more too to increase production in different industries and meet the demand for various products. But there is also an important factor which cannot be ignored. According to the article, the level of domestic oil production together with GDP determines the level of oil imports.
Based on these articles we find that income has a connection with imports but there are other factors which tend to affect U.S. imports along with level of income. For example, we find that while oil imports increase when income increases, the level of imports could remain the same had the domestic oil production increased with the income. Interestingly we discover through these two articles that while higher income leads to higher imports in high quality items, the reverse is true for low quality items. But what would be even more correct to say is that when income increases, there is an increase or decrease in the import of an item depending on variety of two important factors i.e. demand for the item after the increase and production of the item domestically.
We can prove this with the help of an example.
Let us suppose that a is a high quality item being adequately produced by the U.S.B is the low quality version of the same product or some other product that is high in demand but is not being produced sufficiently at home. When income increases, the level of a import is likely to go up while level of B. imports will go down provided the production level of a remains the same domestically and doesn't go up. Else, there would be no significant increase in imports of a because domestic production would be able to accommodate increasing demand.
Bela Balassa. TRADE BETWEEN DEVELOPED and DEVELOPING COUNTRIES': THE DECADE AHEAD. Accessed online http://www.oecd.org/dataoecd/62/19/2501905.pdf
OECD Economic Outlook 2004/1 No. 75, June by Organization for Economic Co-Operation and Development (Jun 30, 2004)
Houthakker, H.S. And Stephen Magee, "Income and Price Elasticities in World Trade,." Review of Economics and Statistics, 51: pp. 111-125, 1969.
Houthhaker and Magee 1969[continue]
"U S Disposable Income And U S " (2010, December 12) Retrieved October 28, 2016, from http://www.paperdue.com/essay/us-disposable-income-and-5824
"U S Disposable Income And U S " 12 December 2010. Web.28 October. 2016. <http://www.paperdue.com/essay/us-disposable-income-and-5824>
"U S Disposable Income And U S ", 12 December 2010, Accessed.28 October. 2016, http://www.paperdue.com/essay/us-disposable-income-and-5824
Coping strategy four: Taking public transportation Taking public transportation will have a more significant income effect than simply trying to drive less or foregoing vehicle maintenance. This will enable the individual to 'opt out' of the increased gas prices. This will enable him or her to spend more money on goods and services, but given the fact that other prices are often affected by gas prices, the prices overall in the
U.S. Economy The May 2007 economy presented a rosy picture: the lowest unemployment rate of the Bush Administration 4.4% (Bureau of Labor Statistics.gov. 2012. PP. 1), the peak of housing values, strong GDP growth of 3.6% (Trading Economics.com. 2012. PP. 1), a stable inflation rate of 2.2% (Trading Economics.com. 2012. PP. 1), and a normalized non-emergency FED Funds of 5.25% (Moneycafe.com. 2012. PP. 1). Yet, the collapse was imminent as the
U.S. E-Tailing Business Information Report E-Tailing Industry Internet retailing or e-tailing industry continues to experience significant revenue and structural growth, despite the global economic downturn that occurred over the last six years and lingers today. One of the primary catalysts of this industry's continued growth is the continued reliance on multichannel retailing and online multichannel management by retailers, who are increasingly relying on these frameworks to accelerate product lifecycles (Keh, Shieh, 73,
For instance we can take the examples of African-Americans, the events and issues show that some ethnic groups had to struggle hard to stay ahead in the social fabric of American society. Conclusion The living conditions of poor and middle segment of the society are main indicators of the health of economy and income distribution. While in developing nations the plight of the poor and even middle segments of society is
U.S. Economy Evaluating the current state of the United States economy Although many are of the opinion that the recession that the globe was forced into in 2008 is finally uplifting and signs of economic revival can be witnessed. The resulting high levels of debt and unemployment from the recession had dragged many countries, especially the United States in to a state of economic turmoil. In order to reverse the effect
U.S. Business Environment in the Next Decade and Implications for Business and Households. Over the last decade, the U.S. economy has been undergoing tremendous challenges. This is because the lingering recession and slow recovery have left the unemployment rate high. Evidence of this can be seen in figures from the Bureau of Labor statistics between 2008 and 2012 (which is illustrated in the below table). US Unemployment Rate from 2008 to
U.S. Automotive Industry Chosen industry: automotive industry is the focus of this analysis. More emphasizes are made on the large -- scale automobile manufacturers. This is because of the inherently interesting industry as a result it being competitive and projected to go through a major restructuring due to globalization in the near days to come. The issue of decreasing oil reserves is the other reason that is going to trigger this