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Free trade, household debt and the great recession- - ©Fotolia-Suns07Butterfly

The rise of imports from China in the 2000s’ led to a strong increase in American households’ debt, reveals a study written by Professors Jean-Noël Barrot, Erik Loualiche, Matthew Plosser and Julien Sauvagnat. This effect is mainly explained by manufacturing workers borrowing to smooth consumption after facing deteriorating labor market conditions. Import competition from China therefore has not (...)

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