Asymmetric Trade Liberalizations and Current Account Dynamics

Alessandro Barattieri

No 447, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: In this paper, I show a strong positive correlation between the value-added share of manufacturing in 2000 and current account balances in 2007 for the Euro area countries. I propose asymmetries in the timing of trade liberalizations as a new mechanism affecting the dynamics of the current account. I build intuition using a simple model. Then, I use an international business cycle model to show how the asymmetric dynamics of trade costs in manufacturing and services in 2000-2007 can partially explain the rise in the German surplus. Lastly, I provide broad empirical support for the key predictions of the theory.

Keywords: Current Account Dynamics; Relative Trade Liberalization Measures (search for similar items in EconPapers)
JEL-codes: F1 F32 F40 (search for similar items in EconPapers)
Pages: pages 51
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-int, nep-pr~ and nep-opm
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Journal Article: Asymmetric trade liberalizations and current account dynamics (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:447

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