Is the US Trade Deficit Sustainable Author:Catherine Mann August 15, 2001, TOKYO (AP) The dollar slipped against the yen, extending its downward trend in New York overnight. The greenback has continued to weaken following the International Monetary Fund's warning on Tuesday that the U.S. current-account deficit -- the broadest measure of trade -- could destabilize the currency. This startling new... more »s item should come as no surprise to anyone who has read Catherine Mann's 1999 book, Is the U.S. Trade Deficit Sustainable? in which she warned that the deficit would be sustainable for only a few years if the dollar did not begin its own modest decline. Indeed, the questions she raised in the following book description are just as poignant today as they were in 1999: The United States trade deficit has hit record levels and continues to rise. Is a chronic and widening deficit sustainable or will the dollar crash, perhaps taking the economy with it? If the problem was one of "twin deficits," why has the external deficit continued to worsen even as the budget deficit narrowed to zero? If US companies are so intensely competitive, why does the external deficit persist? Does the external deficit represent protectionism abroad; will it lead to protectionism at home? This study seeks to answer these perennial questions about the trade deficit. Each chapter presents simple analytical frameworks as a basis for concise, succinct, and clear statements on each major issue. The last section of the book provides an outlook for the deficit and suggests alternative policy courses for dealing with it.« less