Thursday, October 8, 2009

Who's trading with us?

Below is a graph I made using WTO data:


First thing to note is that the financial crisis has caused an unprecedented slump in world trade. Second thing is that global imports do not equal global exports. How could this possibly be? Doesn't world trade = world imports = world exports, by definition? I see three possibilities:

1) Measurement error. (But then the weird thing is how closely those two volumes are tracking each other. You'd expect measurement error to be at least a little bit noisy. An error this systematic is easy to correct for.)

2) I'm missing something very obvious to someone who actually knows something about this stuff.

3) Unbeknownst to most of us, the Earth is trading with other planet(s) and running a slight deficit.

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