Dynamics of the Trade Balance in Theory and Practice Öffentlichkeit Deposited

Creator Series Issue number
  • 323
Date Created
  • 1986-11
Abstract
  • We examine deviations from trend of net exports and other components of GNP for the United States and attempt to build models consistent with their behavior. The most striking fact is that net exports have consistently been countercyclical. We show, first, that dynamic pure-exchange models can only produce a negative correlation between net exports and GNP if the variance of consumption exceeds that of output. In (he United Slates it does not, so this class of models cannot explain observed comovements between output and trade. We then examine government spending and nontraded goods as potential remedies, but show that their behavior is either inconsistent with the data or can be made consistent with any pattern of comovements. The most promising model introduces production and capital formation. Fluctuations are driven by country-specific productivity shocks, in which high productivity domestically leads to high domestic investment and a deficit in the balance of trade. This theory also receives support from the large negative covariance between net exports and investment in American data.

Subject (JEL) Stichwort Date Modified
  • 07/15/2019
Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
Resource type
License

Beziehungen

In Collection:
Zuletzt geändert

Herunterladbarer Inhalt

PDF Herunterladen

Zipped Files

Download a zip file that contains all the files in this work.

Artikel