US trade balance dynamics: the role of fiscal policy and productivity shocks and of financial market linkages
نویسنده
چکیده
This paper examines whether domestic and foreign productivity and fiscal policy changes can account for the wide swings in US net exports during the period 1975]1991. A two-country Real Business Cycle model is used for that purpose. The model is simulated using data on productivity, government purchases and taxes, for the G7 countries. A version of the model with incomplete asset markets, in which only bonds can be used for international capital flows, tracks the US trade balance fairly closely, provided permanent countryspecific productivity shifts are assumed. The simulations suggest that US productivity changes were the main source of fluctuations in US net exports. Q 1998 Elsevier Science Ltd. All rights reserved. JEL classifications: F32, E32
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تاریخ انتشار 1998