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Structural and Cyclical Movements of the Current Account in the U.S. 1976-2007

  • Yoichi Matsubayashi


    (Graduate School of Economics, Kobe University)

The purpose of this study is to analyze fluctuations in the current account of the U.S. by deconstructing structural and non-structural components with a new method. At the beginning of the 1980s, most components of the U.S. current account were structural. After the Plaza agreement in 1985, the U.S structural current account gradually improved. Since the end of the 1990s, the structural current account deficit increased to nearly 3% of GDP. These movements are generally associated with the structural components of private savings and residential investments. The upheaval in the US sub-prime home-loan market since 2007 sharply contracted housing investment and weakened consumption. Some simulations explored herein suggest a high possibility that these dynamics in domestic demand may considerably ameliorate the external imbalances of the U.S. and deteriorate of the dollar.

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Paper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 0829.

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Length: 37 pages
Date of creation: Mar 2009
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Handle: RePEc:koe:wpaper:0829
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  1. Ogawa, Kazuo, 1990. "Cyclical variations in liquidity-constrained consumers: Evidence from macro data in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 4(2), pages 173-193, June.
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  4. Nason, James M & Rogers, John H, 2002. "Investment and the Current Account in the Short Run and the Long Run," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(4), pages 967-86, November.
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  7. Reuven Glick & Kenneth Rogoff, 1992. "Global Versus Country-Specific Productivity Shocks and the Current Account," NBER Working Papers 4140, National Bureau of Economic Research, Inc.
  8. Nason, James M. & Rogers, John H., 2006. "The present-value model of the current account has been rejected: Round up the usual suspects," Journal of International Economics, Elsevier, vol. 68(1), pages 159-187, January.
  9. Otto, Glenn, 1992. "Testing a present-value model of the current account: Evidence from US and Canadian time series," Journal of International Money and Finance, Elsevier, vol. 11(5), pages 414-430, October.
  10. Bussière, Matthieu & Fratzscher, Marcel & Müller, Gernot J., 2004. "Current accounts dynamics in OECD and EU acceding countries - an intertemporal approach," Working Paper Series 0311, European Central Bank.
  11. Yoshikawa, Hiroshi, 1995. "Macroeconomics and the Japanese Economy," OUP Catalogue, Oxford University Press, number 9780198233268, July.
  12. Kazuo Ueda, 1988. "Perspectives on the Japanese Current Account Surplus," NBER Chapters, in: NBER Macroeconomics Annual 1988, Volume 3, pages 217-268 National Bureau of Economic Research, Inc.
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  14. Joshua E. Greene & Magda E. Kandil, 2002. "The Impact of Cyclical Factors on the U. S. Balance of Payments," IMF Working Papers 02/45, International Monetary Fund.
  15. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, June.
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