Does the US current account show a symmetric behavior over the business cycle?

Roberto Duncan

International Review of Economics & Finance, 2016, vol. 41, issue C, 202-219

Abstract: Traditionally, the literature that attempts to explain the link between the current account and output finds a linear negative relationship (e.g., Backus, Kehoe, and Kydland, 1995). Using nonparametric regressions, we find a robust U-shaped relationship between the U.S. current account and the GDP cycle. When output is above (below) its trend the current account and detrended output are positively (negatively) correlated. We argue that this nonlinearity might be caused by persistent productivity shocks coupled with uncertainty shocks about future productivity.

Keywords: U.S. current account; Uncertainty shocks; Business cycles; Nonparametric regression (search for similar items in EconPapers)
JEL-codes: E3 F3 F4 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056015001306
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Does the US Current Account Show a Symmetric Behavior over the Business Cycle? (2015)
Working Paper: Does the US current account show a symmetric behavior over the business cycle? (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:41:y:2016:i:c:p:202-219

DOI: 10.1016/j.iref.2015.08.011

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().