Oil prices and the U.S. trade deficit

Abstract In the new millennium two developments have dominated the international economic situation: the persistence of high oil price and, consequently, the worsening of the U.S. trade deficit. In this paper I argue that it is possible to set forth an alternative explanation of U.S. trade deficit mainly considering a possible microeconomics missing link, taking in account the “twin nature” of the U.S. trade deficit and conjecturing that U.S. trade deficit can be explained as the result of a convergence of the Chinese and U.S. long run interest, in order to obtain a less energy intensive long run growth. So, I set forth the idea that the U.S., as the future exporter of the New Clean Technology, is a very attractive feature for China and this is a possible answer to the question: “Why should China continue to accumulate dollar reserves?”