Global Imbalances and Structural Change in the United States

Timothy Kehoe, Kim Ruhl and Joseph Steinberg

Journal of Political Economy, 2018, vol. 126, issue 2, 761 - 796

Abstract: Since the early 1990s, as the United States borrowed heavily from the rest of the world, employment in the US goods-producing sector has fallen. We construct a dynamic general equilibrium model with several mechanisms that could generate declining goods-sector employment: foreign borrowing, nonhomothetic preferences, and differential productivity growth across sectors. We find that only 15.1 percent of the decline in goods-sector employment from 1992 to 2012 stems from US trade deficits; most of the decline is due to differential productivity growth. As the United States repays its debt, its trade balance will reverse, but goods-sector employment will continue to fall.

Date: 2018
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Related works:
Working Paper: Global Imbalances and Structural Change in the United States (2015)
Working Paper: Global imbalances and structural change in the United States (2013)
Working Paper: Global Imbalances and Structural Change in the United States (2013)
Working Paper: Global Imbalances and Structural Change in the United States (2013)
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