Dissecting the Dynamics of the US Trade Balance in an Estimated Equilibrium Model

In an estimated two-country DSGE model, we find that efficiency shocks specific to investment account for more than half of the forecast variance of cyclical fluctuations in the US trade balance. Both domestic and foreign investment-specific shocks have a substantial impact on the variability of the imbalance. Total factor productivity shocks do not matter for the variance and even lead to procyclicality in the trade balance.


Year:
2011
Publisher:
Ghent University Faculty of Economics and Business Administration Working Paper 2008/544
Keywords:
Note:
JEL Classifications: C11, F41
Laboratories:




 Record created 2011-09-30, last modified 2018-09-13

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