The primary trade deficit is now 5 percent of GDP, violating the stability condition by nearly this same amount. At this rate, the external debt ratio will climb very quickly. While the trade deficit does have equilibrating tendencies, as will be discussed later, there are also forces that tend to increase it.
Econometric studies of the basic demand for imports and exports find that the U.S. income elasticity of demand for imports is higher than the foreign income elasticity of demand for U.S. exports.