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Forecasting U.S. Trade in Services


  • Alan V. Deardorff

    (University of Michigan)

  • Saul H. Hymans

    (University of Michigan)

  • Robert M Stern

    (University of Michigan)

  • Chong Xiang

    (University of Michigan)


This paper provides a set of forecasts of United States international trade in services, both at the aggregate level and for four subcategories. These sectors are: travel, which is mostly tourist expenditures; passenger fares, which is mostly passenger air transportation; transportation, other than passenger transportation; and other private services, including education, financial services, insurance, telecommunications, and business, professional and technical services. A forecasting model is constructed and estimated, based on conventional economic forces of supply and demand, dependent on cost variables and income variables as well as relative prices. For forecasting purposes, these variables are taken from the Michigan Quarterly Econometric Model of the U.S. Economy, a macroeconomic forecasting model with forecasts provided regularly by the University of Michigan Research Seminar in Quantitative Economics. The equations of the services trade model are reported and discussed, and the performance of the estimated equations is evaluated. The quarterly forecast paths are provided for both aggregate and sectoral services trade, including exports and imports, through the end of 2001. Results indicate that imports will continue to rise over the forecast period, while exports, after remaining nearly stationary for several quarters in some sectors in 1999, will resume their rise thereafter. This forecasting work is to be continued, and it is suggested, in addition, that future research would be useful to explore the determinants of the production and sales of foreign services affiliates of U.S. parent companies.

Suggested Citation

  • Alan V. Deardorff & Saul H. Hymans & Robert M Stern & Chong Xiang, 2000. "Forecasting U.S. Trade in Services," Working Papers 467, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:467

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    Cited by:

    1. Abhijit Das & Rashmi Banga & Dinesh Kumar, 2011. "Global Economic Crisis : Impact and Restructuring of the Services Sector in India," Trade Working Papers 23225, East Asian Bureau of Economic Research.
    2. Adusei Poku, Eugene & Broni-Pinkrah, Samuel & Effah Nyamekye, Gabriel, 2016. "Modelling and assessment of the effect of income on service exports in Ghana," MPRA Paper 72312, University Library of Munich, Germany.
    3. Kamath, Kishore & Paul, Varun, 2011. "Understanding recent developments in UK external trade," Bank of England Quarterly Bulletin, Bank of England, vol. 51(4), pages 294-304.

    More about this item


    Services; International Trade;

    JEL classification:

    • F1 - International Economics - - Trade


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