Long-run growth expectations and "global imbalances"

  • This paper examines to what extent the build-up of 'global imbalances' since the mid-1990s can be explained in a purely real open-economy DSGE model in which agents' perceptions of long-run growth are based on filtering observed changes in productivity. We show that long-run growth estimates based on filtering U.S. productivity data comove strongly with long-horizon survey expectations. By simulating the model in which agents filter data on U.S. productivity growth, we closely match the U.S. current account evolution. Moreover, with household preferences that control the wealth effect on labor supply, we can generate output movements in line with the data.

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Author:Mathias Hoffmann, Michael U. Krause, Thomas LaubachGND
Parent Title (English):Deutsche Bundesbank: [Discussion paper / 1] Discussion paper : Ser. 1, Economic studies ; No. 2011,01
Publisher:Deutsche Bundesbank
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2011
Year of first Publication:2011
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2014/12/01
Tag:Current Account; Kalman filter; News and Business Cycles; Open Economy DSGE Models; Real-time Data; Trend Growth
GND Keyword:USA; Wirtschaftswachstum; Produktivität; Adaptive Erwartung; Erwartungsbildung; Konjunktur; Umfrage; Leistungsbilanz; Außenwirtschaftliches Gleichgewicht; Zahlungsbilanzausgleich; Zahlungsbilanzungleichgewicht; Dynamisches Gleichgewicht; Offene Volkswirtschaft
Reproduction permitted only if source is stated.
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht