I have wrote a short paper on chinese exchange rate on american trade deficit and employment. Now i want to extend this paper to a 50-55 page long master level thesis with at least 15 sources need in...

The CNY Exchange rate and its effect on American Trade Deficit and Employment.
At the outset, before starting discussion on the impact of Chinese Yuan on the U.S. Economy, inter
alia, Trade deficit, Current account balance, Balance of payment – the parameters for measurement
of equilibrium of import and exports of a country including cross border capital account transaction
and level of employment etc., we may briefly explain these terms, which will be used herein below.
We shall first consider the Trade balance of a country. In simple and plain sense it conveys the
difference exports and imports. The export and import are both inclusive of goods and services are
produced and generated from the country of origin, with an exception of re-export by a different
country to USA. In this process, export of goods and services from USA indicates income, and it adds
to the trade balance, on the other hand, when USA imports goods and services, whether the goods
and services produced / generated in the host country or it was imported from third country, other
than USA. It entails some amount of payment and form as a deductible from the amount of trade
balance.
The trade balance can be neutral i.e., Zero – it mean the amount of import in U.S. $ ties with the
amount of the export in a given financial year, it is known as BALANCED TRADE. But it is seldom
possible or manifested, in usual sense it may be positive or negative. If USA has exported goods and
services more than the value of imports for goods and services from other countries and it shall be
denominated in US $ terms. In case of the difference is positive i.e., the export is more than the
imports it constitutes as TRADE SURPLUS for that year under reference. On the other hand, if the
value of imports of goods and services is more than the value of exports, it indicates TRADE DEFICIT
for USA in that financial year under reference.
While discussing the subject of balance of trade, we do not forget to mention the current account
balance for a country. It is in plain speaking refers to the difference between the income and
expenditure of a country, here we mean for USA. According to Katherine N Russ & Diego Valderrama
(2007), the trade balance is a major component of the current account balance. Thus, it is common
to see the terms “current account balance “and “trade balance” are used unchangeably, although
the two terms are not conveys exactly the similar thing.
In ordinary sense, when a country i.e. here USA has a trade surplus (say positive balance of trade), by
definition, the national saving shall exceed the domestic investment, it implies a country having a
surplus current account balance is a net lender, where the saving of the country in not invested in
the home country and lends the said amount to the other counties. To the contrary, a country with
deficit current account balance, the need of investment is higher than the national savings; it
becomes net borrower to meet the need of investment. However, the nomenclature of current
account forms a part of ‘balance of payment’ that counts cross border transaction of goods, services,
and finances. The primary components are therefore (1) The Current account, (2) The Financial
Account, and (3) Capital Account. The import and or export of goods and services are forming part
under item no (1) and the engagement in transaction in financial assets are forming under item (2)
and again exchange or transfer of financial asset / wealth is falling under the last mentioned item.
These are generally intangible assets like copyrights , trademarks etc., and needless to say that such
movements are not significant for the USA , however it impacts U.K., as their income under royalty
etc are quite significant.
It is pertinent to mention here that, the nominal exchange rate is known as it can trade in currency
between the countries, whereas the real exchange rate implies to the rate anybody can trade the
goods and services one country to another country for the cross border transaction of goods and
services. The first one is visible in newspapers and televisions and the later one is bears academic
interest and the economists are taking these rates for analysis of exchange rate and its real effects
on fluctuation of rates.
Now, we come to the main question, why United States is carrying the trade deficit from decade
over decades. There is no simple answer for this symptom, nor can any analyst make sure us that the
reduction of trade deficit will definitely benefit the United States from all the angles and parameters
financial health and equilibrium. The legacy of trade deficit of Unites States many decades long and
we have to go beyond at least 100 years of the financial history of the United States.
For the sake of simplicity, we are going back to the word War - I , when the industrial revolution in
the European continent were in full swing and raw materials and basic minerals were coming from
their own colonies over the world particularly from Asia, African and Latin America. However, the
long lasting world war – I created a deep scar to the strong European economies and the United
States remained more or less unaffected in this regard. In the post war period, the United States
supplied the developmental requirement including the capital items and the economy of the United
States received a booster by chance and U.S. companies came in limelight as a multinational
companies and US $ became as a premier currency and took a reign over the of British currency £.
Again the World War II surfaced, the long lasting war damaged the basic infrastructure and financial
endurance of United Kingdom and its allies including the then USSR. During the pendency of war the
United States supplied the defence materials to the countries like United Kingdom and its allies and
made a good profit on its export and stood in a favourable position, whereas the United States
already were self sufficient in agricultural production and its economy consolidated, and it remained
unaffected from the severe damage like Europeans except the damage caused in Pearl Harbour by
the Japan.
These factors pushed the U.S. economy in a forward position and the U.S. and its allies put
restriction on Japan and Germany. The U.S. $ undoubtedly accepted as international currency for
cross border trades and loan etc., and it is now accepted by all the countries.
However, the fortune of the United States did not last for a very long time, the United States
initiated a new war in the Asian continent i.e. in Indonesia, which is called as Indonesian War - II and
also known as Vietnam War or American War. The long lasting war started in the year 1955 and
ended about 1975 in the event of recapture of city of Saigon by the Vietnamese forces. The long
lasting war culminated loss of American soldiers and entail a huge fund outflow from the Federal
Government of United States, which had weakened the economy of United States and the fiscal
fortune took reverse turn and became a seed of the negative balance of payment. There were
another riding factor, that deployment of US military at naval base at Guantanamo bay, at Cuba, and
deployment of its military in other parts of world like Afghanistan created another financial strain on
the US Government and in both case the U.S. Government could not succeed and the fortune took a
downward turn. In this meantime, the German and Japanese economy resurfaced and took
prominent space in world trade particularly in consumer durables including car production and sales.
However, the U.S Government won the both war against Iraq in gulf region, this helped the
resurgence of U.S. in world politics but did to help too much to rectify the balance of payment.
However, there is a positive sign by exploiting of shale gas production and reduced its dependency
on imported fuel. Again, the U.S needs to boost its value added industrial production like aircraft
etc., to increase its exports.
The Balance of Payment from the year 1960 to 2014 of The USA
Source: http://www.census.gov/foreign-trade/statistics/historical/gands.txt
Date: June 3, 2015
U.S. Trade in Goods and Services - Balance of Payments (BOP) Basis
Value in millions of dollars
1960 through 2014
Balance Exports Imports
Period Total Goods BOP Services Total Goods BOP Services Total Goods BOP Services
1960 3,508 4,892 -1,384 25,940 19,650 6,290 22,432 14,758 7,674
1961 4,195 5,571 -1,376 26,403 20,108 6,295 22,208 14,537 7,671
1962 3,370 4,521 -1,151 27,722 20,781 6,941 24,352 16,260 8,092
1963 4,210 5,224 -1,014 29,620 22,272 7,348 25,410 17,048 8,362
1964 6,022 6,801 -779 33,341 25,501 7,840 27,319 18,700 8,619
1965 4,664 4,951 -287 35,285 26,461 8,824 30,621 21,510 9,111
1966 2,939 3,817 -878 38,926 29,310 9,616 35,987 25,493 10,494
1967 2,604 3,800 -1,196 41,333 30,666 10,667 38,729 26,866 11,863
1968 250 635 -385 45,543 33,626 11,917 45,293 32,991 12,302
1969 91 607 -516 49,220 36,414 12,806 49,129 35,807 13,322
1970 2,254 2,603 -349 56,640 42,469 14,171 54,386 39,866 14,520
1971 -1,302 -2,260 958 59,677 43,319 16,358 60,979 45,579 15,400
1972 -5,443 -6,416 973 67,222 49,381 17,841 72,665 55,797 16,868
1973 1,900 911 989 91,242 71,410 19,832 89,342 70,499 18,843
1974 -4,293 -5,505 1,212 120,897 98,306 22,591 125,190 103,811 21,379
1975 12,404 8,903 3,501 132,585 107,088 25,497 120,181 98,185 21,996
1976 -6,082 -9,483 3,401 142,716 114,745 27,971 148,798 124,228 24,570
1977 -27,246 -31,091 3,845 152,301 120,816 31,485 179,547 151,907 27,640
1978 -29,763 -33,927 4,164 178,428 142,075 36,353 208,191 176,002 32,189
1979 -24,565 -27,568 3,003 224,131 184,439 39,692 248,696 212,007 36,689
1980 -19,407 -25,500 6,093 271,834 224,250 47,584 291,241 249,750 41,491
1981 -16,172 -28,023 11,851 294,398 237,044 57,354 310,570 265,067 45,503
1982 -24,156 -36,485 12,329 275,236 211,157 64,079 299,391 247,642 51,749
1983 -57,767 -67,102...