Demand and Defective Growth Patterns: The Role of the Tradable and Non-tradable Sectors in an Open Economy

Sandile Hlatshwayo and A. Spence

American Economic Review, 2014, vol. 104, issue 5, 272-77

Abstract: This paper examines the underlying structural elements of US growth patterns, pre- and post-crisis. Prior to the recession, the US economy exhibited a defective growth pattern driven by outsized domestic demand. As domestic aggregate demand retreats to more sustainable levels relative to total income, the tradable side of the economy is a catalyst for restoring strong growth. A structural rebalancing is already underway; although it is only a third of the economy, the tradable sector generated more than half of gross gains in value-added since the start of the recovery. However, distributional issues loom on the horizon.

JEL-codes: E23 E32 F43 G01 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.5.272
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Citations: View citations in EconPapers (28)

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