Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks

Massimo Giovannini (), Stefan Hohberger, Robert Kollmann (), Marco Ratto, Werner Roeger and Lukas Vogel

No 344, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: The trade balances of the Euro Area (EA) and of the U.S. have improved markedly after the Global Financial Crisis. This paper quantifies the drivers of EA and U.S. economic fluctuations and external adjustment, using an estimated (1999-2017) three-region (U.S., EA, rest of world) DSGE model with trade in manufactured goods and in commodities. In the model, commodity prices reflect global demand and supply conditions. The paper highlights the key contribution of the post-crisis collapse in commodity prices for the EA and U.S. trade balance reversal. Aggregate demand shocks originating in Emerging Markets too had a significant impact on EA and U.S. trade balances. The broader lesson of this paper is that Emerging Markets and commodity shocks are major drivers of advanced countries? trade balances and terms of trade.

Keywords: EA and U.S. external adjustment; commodity markets; emerging markets (search for similar items in EconPapers)
JEL-codes: F2 F3 F4 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2018-08-06
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Euro Area and US external adjustment: The role of commodity prices and Emerging Market shocks (2019)
Working Paper: Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks (2018)
Working Paper: Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks (2018)
Working Paper: Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks (2018)
Working Paper: Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:344

DOI: 10.24149/gwp344

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