Domestic Versus Foreign Drivers Of Trade (Im)Balances: How Robust Is Evidence From Estimated DSGE Models

Roberta Cardani, Stefan Hohberger, Philipp Pfeiffer and Lukas Vogel

No 2020025, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Estimated DSGE models tend to ascribe a significant and often predominant part of a country's trade balance (TB) dynamics to domestic drivers ("shocks"), suggesting foreign factors to be only of secondary importance. This paper revisits the result based on more agnostic approaches to shock transmission and using "agnostic structural disturbances". We estimate multi-region models for Germany and Spain as countries with very distinct TB patterns since 1999. Results suggest that domestic drivers remain dominant when theory-based restrictions on shock transmission are relaxed, although the transmission of foreign shocks is strengthened.

Keywords: Agnostic structural disturbances; open economy DSGE model; trade balance; Germany; Spain (search for similar items in EconPapers)
JEL-codes: F30 F32 F41 F45 (search for similar items in EconPapers)
Date: 2020-03-02
New Economics Papers: this item is included in nep-dge, nep-int and nep-opm
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https://sites.uclouvain.be/econ/DP/IRES/2020025.pdf (application/pdf)

Related works:
Journal Article: Domestic versus foreign drivers of trade (im)balances: How robust is evidence from estimated DSGE models? (2022)
Working Paper: Domestic versus foreign drivers of trade (im)balances: How robust is evidence from estimated DSGE models (2020)
Working Paper: Domestic versus foreign drivers of trade (im)balances: How robust is evidence from estimated DSGE models? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2020025

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