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Global Imbalances and Structural Change in the United States

  • Timothy J. Kehoe
  • Kim J. Ruhl
  • Joseph B. Steinberg

Since the early 1990s, as the United States has borrowed from the rest of the world, employment in U.S. goods-producing sectors has fallen. Using a dynamic general equilibrium model, we find that rapid productivity growth in goods production, not U.S. borrowing, has been the most important driver of the decline in goods-sector employment. As the United States repays its debt, its trade balance will reverse, but goods-sector employment will continue to fall. A sudden stop in foreign lending in 2015-2016 would cause a sharp trade balance reversal and painful reallocation across sectors, but would not affect long-term structural change.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19339.

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Date of creation: Aug 2013
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Handle: RePEc:nbr:nberwo:19339
Note: EFG IFM
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