Global Imbalances: The Role of Non-TradableTotal Factor Productivity in Advanced Economies

Nicoletta Batini, Pietro Cova, Massimiliano Pisani and Alessandro Rebucci ()

No 09/63, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the role played by total factor productivity (TFP) in the tradable and nontradable sectors of the United States, the euro area, and Japan in the emergence and evolution of today's global trade imbalances. Simulation results based on a dynamic general equilibrium model of the world economy, and using the EU KLEMS database, indicate that TFP developments in these economies can account for a significant fraction of the total deterioration in the U.S. trade balance since 1999, as well as account for some the surpluses in the euro area and Japan. Differences in TFP developments across sectors can also partially explain the evolution of the real effective value of the U.S. dollar during this period.

Keywords: Payments imbalances; United States; European Union; Japan; Developed countries; Productivity; Balance of trade; Economic models; Time series; Cross country analysis (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec and nep-eff
Date: Written
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