Trend shocks and the countercyclical U.S. current account

David Amdur and Eylem Ersal Kiziler

Canadian Journal of Economics, 2014, vol. 47, issue 2, 494-516

Abstract: From 1960 to 2009, the U.S. current account balance has tended to decline during expansions and improve in recessions. We argue that shocks to the trend growth rate of productivity can help explain the countercyclical U.S. current account. Our framework is a twocountry, twogood business cycle model in which international asset trade is limited to a single, noncontingent bond. We identify trend and transitory shocks to U.S. productivity using generalized method of moments (GMM) estimation. The specification that best matches the data assigns a large role to trend shocks. The estimated model also captures key facts regarding international comovement.

JEL-codes: E32 F41 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Working Paper: Trend shocks and the countercyclical U.S. current account (2012)
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