Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57006 
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dc.contributor.authorHudson, Michaelen
dc.date.accessioned2012-01-03-
dc.date.accessioned2012-04-12T14:18:55Z-
dc.date.available2012-04-12T14:18:55Z-
dc.date.issued2011-
dc.identifier.urihttp://hdl.handle.net/10419/57006-
dc.description.abstractRicardian trade theory was based on the cost of labor at a time when grain and other consumer goods accounted for most subsistence spending. But today's budgets are dominated by payments to the finance, insurance, and real estate (FIRE) sector and to newly privatized monopolies. This has made FIRE the determining factor in trade competitiveness. The major elements in US family budgets are housing (with prices bid up on credit), debt service, and health insurance - and wage withholding for financializing Social Security and Medicare. Industrial firms also have been financialized, using debt leverage to increase their return on equity. The effect is for interest to increase as a proportion of cash flow (earnings before interest, taxes, depreciation, and amortization, or EBITDA). Corporate raiders pay their high-interest bondholders, while financial managers also are using EBITDA for stock buybacks to increase share prices (and hence the value of their stock options). Shifting taxes off property and onto employment and retail sales spurs the financialization of family and business budgets as tax cuts on property are capitalized into higher bank loans. Payments to government agencies for taxes and presaving for Social Security and Medicare absorb another 30 percent of family budgets. These transfer payments to the FIRE sector and government agencies have transformed international cost structures, absorbing roughly 75 percent of US family budgets. This helps explain the deteriorating US industrial trade balance as the economy has become financialized.en
dc.language.isoengen
dc.publisher|aLevy Economics Institute of Bard College |cAnnandale-on-Hudson, NYen
dc.relation.ispartofseries|aWorking Paper |x699en
dc.subject.jelF3en
dc.subject.jelF4en
dc.subject.jelF10en
dc.subject.jelF17en
dc.subject.jelF18en
dc.subject.jelF37en
dc.subject.jelG12en
dc.subject.jelG21en
dc.subject.jelH21en
dc.subject.jelJ61en
dc.subject.ddc330en
dc.subject.keywordinternational trade theoryen
dc.subject.keywordfinancializationen
dc.titleTrade and payments theory in a financialized economy-
dc.typeWorking Paperen
dc.identifier.ppn682080713en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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