Using a fundamental identity from macroeconomics, the relationship between the trade balance and expenditure-saving decisions can be expressed as:

$X - M = (S - I) + (T - G)$

Where:

• X represents exports,
• M represents imports,
• S is private savings,
• I is investment in plant and equipment,
• T is taxes net of transfers,
• G is government expenditure.

From this relationship, a trade surplus (X > M) must be reflected in either a fiscal surplus (T > G), an excess of private saving over investment (S > I), or both. Therefore, when a country has a fiscal surplus (T > G) and an excess of private saving over investment (S > I), its exports are greater than its imports (X > M).