A structural decomposition of the U.S. trade balance: Productivity, demographics and fiscal policy

Andrea Ferrero

Journal of Monetary Economics, 2010, vol. 57, issue 4, 478-490

Abstract: The US external deficits have been the most striking manifestation of global imbalances. This paper investigates the contribution of productivity growth, demographics and fiscal policy in accounting for the evolution of the US external imbalances against industrialized countries during the last three decades. Productivity growth plays a dominant role. Demographics explain a non-negligible and nearly permanent component of the US trade deficit. Furthermore, the international demographic transition is crucial for large US external imbalances to be consistent with the persistent decline of world real interest rates observed in the data. Fiscal policy is of minor importance.

Keywords: Global; imbalances; Productivity; growth; Demographic; trends; Fiscal; policy; World; real; interest; rates (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (92)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:57:y:2010:i:4:p:478-490

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