US imbalances: The role of technology and policy
Abstract
This paper investigates the role of three likely factors in driving the steady deterioration of the US external balance: US technology developments, changes in the US government fiscal position and the Fedâs monetary policy. Estimating several Vector Autoregressions on US data over the period 1982:2 to 2005:4 we identify five structural shocks: a multi-factor productivity shock; an investment-specific technology shock; a monetary policy shock; and a fiscal revenue and spending shock. Together these shocks can account for the deterioration and subsequent reversal of the trade balance in the 1980s. Productivity improvements and fiscal and monetary policy easing also play an important role in the increase of the external deficit since 2000, but these structural shocks can not explain why the trade balance deteriorated in the second half of the 1990s. JEL Classification: F3, F4.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Elsevier in its journal Journal of International Money and Finance.
Volume (Year): 26 (2007)
Issue (Month): 4 (June)
Pages: 523-545
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30443
Related research
Keywords:Other versions of this item:
- Bems, Rudolfs & Dedola, Luca & Smets, Frank, 2007. "US Imbalances: The Role of Technology and Policy," CEPR Discussion Papers 6110, C.E.P.R. Discussion Papers.
- Rudolfs Bems & Luca Dedola & Frank Smets, 2007. "US imbalances: the role of technology and policy," Working Paper Series 719, European Central Bank.
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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