The US Dollar and Trade Deficit: What Accounts for the Late 1990s?∗
نویسنده
چکیده
This paper asks to which extent productivity shocks may account for real exchange rate and trade balance developments in the US in the second half of the 1990s. The analysis is based on a version GEM calibrated to analyze macroeconomic interdependence between the US and the rest of the world. The paper concludes that the Balassa-Samuelson effect of a permanent productivity shock in the tradable sector of the economy may explain about half of the US dollar real appreciation in the late 1990s, but a broadly defined “risk premium” and some uncertainty about the persistence of these shocks are needed to match the data more satisfactorily.
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