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Does the US Current Account Show a Symmetric Behavior over the Business Cycle?

Roberto Duncan ()

No 2015-51, Working Papers from Peruvian Economic Association

Abstract: Traditionally, the literature that attempts to explain the link between the current account and output finds a linear negative relationship (e.g., Backus et al., 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)
New Economics Papers: this item is included in nep-eff, nep-mac and nep-opm
Date: 2015-09
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Related works:
Journal Article: Does the US current account show a symmetric behavior over the business cycle? (2016) Downloads
Working Paper: Does the US current account show a symmetric behavior over the business cycle? (2015) Downloads
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