Research Of Industrial Structure’s Influence On Long-term Trade Imbalance

Trade imbalance is an important issue to each country. As it involves the interests of all countries, so it is also one of the most controversial topics. According to traditional theory, under the floating exchange rate system, if the international trade and capital flows are free-flowing, the country’s trade balance is automatically balanced. So "trade balancing" has been listed as a basic goal in most countries’national trade policy. But this article first questioned this, pointing out either the United States or the United Kingdom and other developed countries, both in the fixed-rate period or in the period of floating exchange rates had neither automatically trade balance, the government had not performed the "pursuit of balanced trade " policy. Therefore, we reviewed domestic and foreign literature of this field and analyzed American historical data. we propose a hypothesis that industrial structure may determine its trading status. Then we summarizes the logic of causality and mechanism between industrial structure and trade; we use new Keynesian’s DSGE models in monetary economics in the creation of the introduction of the currency and interest rates, get rid of the monetary neutrality on the issue by using the model of monetary constraints.Then we use high-end services and real economy to distinguish countries’industrial structure and establish a mathematical model. After these, we analysis other typical developed and emerging market countries conducted a similar result and prove that the theoretical model is not only applied to the United States, also applies to other typical market economies3. In the econometric analysis, we prove that the impact of industrial structure to trade is greater than exchange rate. Also with research experience has shown, we prove that the industrial structure determine is validity and apply to trade theory. Finally, we based on the theory of industrial structure determines trade and provide the basic policy implications. Thus, in this article in accordance with the standard theory of paradigm, from a realistic data summarizing a "hypothesis", then creating a mathematical model based on the hypothesis, and then test and interpret the policy implications through the metering system established industrial structure determines trade theory and policy.