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Global Imbalances: The Role of Non-TradableTotal Factor Productivity in Advanced Economies

Author/Editor: Cova, Pietro | Pisani, Massimiliano | Batini, Nicoletta | Rebucci, Alessandro
Authorized for Distribution: March 1, 2009
Electronic Access: Free Full Text (PDF file size is 523KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper investigates the role played by total factor productivity (TFP) in the tradable and nontradable sectors of the United States, the euro area, and Japan in the emergence and evolution of today's global trade imbalances. Simulation results based on a dynamic general equilibrium model of the world economy, and using the EU KLEMS database, indicate that TFP developments in these economies can account for a significant fraction of the total deterioration in the U.S. trade balance since 1999, as well as account for some the surpluses in the euro area and Japan. Differences in TFP developments across sectors can also partially explain the evolution of the real effective value of the U.S. dollar during this period.
 
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Series: Working Paper No. 09/63
Subject(s): Payments imbalances | United States | European Union | Japan | Developed countries | Productivity | Balance of trade | Economic models | Time series | Cross country analysis
Author's keyword(s): global imbalances | productivity | trade deficit | exchange rates | non-tradable sector | GEM
 
English  
    Published:   March 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009063   Pages:   39
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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