The expectations-driven US current account

Auteurs

• Mathias Hoffmann

Paramètres

• Affaires et économie
• Discussion paper / Deutsche Bundesbank; Eurosystem

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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.

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• Année de publication: 2013