Perceived Welfare Effects of Current Account Deficit - Evidence from American Economy 1967-2005
International Trade from EconWPA
The paper addresses the question, whether the increasing current account deficit has negative impact on American economy and society. Using data for American economy in years 1967 – 2005, it will be shown that perceived welfare effects, as measured by changes in Consumer Confidence, asymmetrically reflect changes in exports and imports. The provided VAR analysis allowed to filter out potential output and cyclical movements in endogenous factors and to describe the remaining error in terms of external trade volatility. Keeping information on exports and imports as external factors allowed to estimate a structure of the model, where the responsiveness of perceived welfare in respect to simulated changes in current account was studied. The provided analysis shows that opening the economy enhanced observed volatility of the Consumer Confidence, while presence of the current account deficit allowed to obtain superior welfare.
Keywords: Current Account; Trade Liberalization; Welfare (search for similar items in EconPapers)
JEL-codes: F16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Note: Type of Document - pdf; pages: 37
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpit:0512013
Access Statistics for this paper
More papers in International Trade from EconWPA
Series data maintained by EconWPA ().