Arbeitspapier

The expectations-driven US current account

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Since 1991, survey expectations of long-run output growth for the U.S. relative to the rest of the world exhibit a pattern strikingly similar to that of the U.S. current account, and thus also to global imbalances. We show that this finding can to a large extent be rationalized in a two-region stochastic growth model simulated using expected trend growth filtered from observed productivity. In line with the intertemporal approach to the current account, a major part of the buildup of the U.S. current account deficit appears to be driven by the optimal response of households and firms to improved growth prospects.

ISBN
978-3-86558-898-2
Language
Englisch

Bibliographic citation
Series: Bundesbank Discussion Paper ; No. 10/2013

Classification
Wirtschaft
Current Account Adjustment; Short-term Capital Movements
General Aggregative Models: Neoclassical
Business Fluctuations; Cycles
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Economic Growth and Aggregate Productivity: General
Subject
open economy
stochastic trend growth
Kalman filter
news shocks

Event
Geistige Schöpfung
(who)
Hoffmann, Mathias
Krause, Michael U.
Laubach, Thomas
Event
Veröffentlichung
(who)
Deutsche Bundesbank
(where)
Frankfurt a. M.
(when)
2013

Handle
Last update
10.03.2025, 11:41 AM CET

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Object type

  • Arbeitspapier

Associated

  • Hoffmann, Mathias
  • Krause, Michael U.
  • Laubach, Thomas
  • Deutsche Bundesbank

Time of origin

  • 2013

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