Perceived Welfare Effects of Current Account Deficit - Evidence from American Economy 1967-2005
AbstractThe paper addresses the question, whether the increasing current account deficit has negative impact on American economy and society. Using data for American economy in years 1967 – 2005, it will be shown that perceived welfare effects, as measured by changes in Consumer Confidence, asymmetrically reflect changes in exports and imports. The provided VAR analysis allowed to filter out potential output and cyclical movements in endogenous factors and to describe the remaining error in terms of external trade volatility. Keeping information on exports and imports as external factors allowed to estimate a structure of the model, where the responsiveness of perceived welfare in respect to simulated changes in current account was studied. The provided analysis shows that opening the economy enhanced observed volatility of the Consumer Confidence, while presence of the current account deficit allowed to obtain superior welfare.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0512013.
Length: 37 pages
Date of creation: 15 Dec 2005
Date of revision:
Note: Type of Document - pdf; pages: 37
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Web page: http://184.108.40.206
Current Account; Trade Liberalization; Welfare;
Find related papers by JEL classification:
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
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