Kadee Russ (University of California Davis) joins Keynes and Bown to discuss her research on why Korea’s trade surplus grew so widely after the Korea-US (KORUS) Free Trade Agreement went into effect in 2012. They explain the role of trade diversion, or US imports from South Korea displacing imports previously coming in from other countries like China and Mexico. They also discuss contributions due to differences in US and South Korean rates of economic growth, and the right way to think about trade deficits.

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• Katheryn N. Russ and Deborah L. Swenson. 2019. “Trade Diversion and Trade Deficits: The Case of the Korea-U.S. Free Trade Agreement,” Journal of the Japanese and International Economies 52: 22-31.