Global Imbalances and Structural Change in the United States

Kim Ruhl, Joseph Steinberg and Timothy Kehoe

No 1089, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: The United States has borrowed heavily from the rest of the world since the early 1990s. We build a model where this borrowing is driven by foreign demand for saving – a global savings glut – that matches the dynamics of the U.S. trade balance, real exchange rate, sector-level trade balances, and reallocation of labor across sectors. We use our model to study what will happen when the savings glut ends. The U.S. will run a permanent trade surplus and its real exchange rate will depreciate substantially, but goods sector employment will continue to fall. A sudden stop will cause a sharp trade balance reversal, large real exchange rate depreciation, and painful reallocation across sectors but will have little lasting impact on the U.S. economy’s trajectory.

Date: 2013
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Related works:
Journal Article: Global Imbalances and Structural Change in the United States (2018)
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)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:1089

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