Modelling U.S. services trade flows: a cointegration-ECM approach
The U.S. service surplus soared from near zero in 1985 to about $60 billion in 1992, offsetting about two thirds of the goods trade deficit. Could this merely reflect improvement in data collection? Or does this mean U.S. services industries are more competitive internationally than goods industries? Is the services surplus likely to continue to rise? This paper estimates a forecastable model of U.S. services trade to address the above questions. We find that data improvement actually had a negative net impact on the services surplus, since it affected imports more than exports. Instead, the surge in the services surplus was mainly due to strong foreign growth and, to a lesser extent, dollar depreciation. An increase in either outward or inward foreign direct investment asset (FDIA) has a significant and positive impact on both exports and imports of other private services, but has only a modest net effect on the U.S. services balance. Thus, the outlook for the U.S. services balance largely depends on the growth prospect of foreign economies.
|Date of creation:||1995|
|Contact details of provider:|| Postal: 33 Liberty Street, New York, NY 10045-0001|
Web page: http://www.newyorkfed.org/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May.
- Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier.
- Irving B. Kravis, 1983. "Services in the Domestic Economy and in World Transactions," NBER Working Papers 1124, National Bureau of Economic Research, Inc.
- Clarida, Richard H, 1997.
"The Real Exchange Rate and US Manufacturing Profits: A Theoretical Framework with Some Empirical Support,"
International Journal of Finance & Economics,
John Wiley & Sons, Ltd., vol. 2(3), pages 177-187, July.
- Richard H. Clarida, 1992. "The real exchange rate and US manufacturing profits: a theoretical framework with some empirical support," Research Paper 9214, Federal Reserve Bank of New York.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
- William L. Helkie & Lois E. Stekler, 1987. "Modeling investment income and other services in the U.S. international transactions accounts," International Finance Discussion Papers 319, Board of Governors of the Federal Reserve System (U.S.).
When requesting a correction, please mention this item's handle: RePEc:fip:fednrp:9518. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Farber)
If references are entirely missing, you can add them using this form.