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Technology capital and the U.S. current account (appendices)

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  • Ellen R. McGrattan
  • Edward C. Prescott

Abstract

Appendix A provides details for the computation of our model's equilibrium paths, the construction of model national and international accounts, and the sensitivity of our main findings to alternative parameterizations of the model. We demonstrate that the main finding of our paper - namely, that the mismeasurement of capital accounts for roughly 60 percent of the gap in FDI returns - is robust to alternative choices of income shares, depreciation rates, and tax rates, assuming the same procedure is followed in setting exogenous parameters governing the model's current account. Appendix B demonstrates that adding technology capital and locations to an otherwise standard two-country general equilibrium model has a large impact on the predicted behavior of labor productivity and net exports.

Suggested Citation

  • Ellen R. McGrattan & Edward C. Prescott, 2009. "Technology capital and the U.S. current account (appendices)," Staff Report 407, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmsr:407
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