Appendices: Technology Capital and the U.S. Current Account

Posted: 19 Jul 2008

See all articles by Ellen R. McGrattan

Ellen R. McGrattan

Federal Reserve Bank of Minneapolis - Research Department; University of Minnesota - Twin Cities; National Bureau of Economic Research (NBER)

Edward C. Prescott

Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER)

Date Written: April 2008

Abstract

Appendix A provides details for the computation of our model's equilibrium paths, the construction of model national and international accounts, and the sensitivity of our main findings to alternative parameterizations of the model. We demonstrate that the main finding of our paper - namely, that the mismeasurement of capital accounts for roughly 60 percent of the gap in FDI returns - is robust to alternative choices of income shares, depreciation rates, and tax rates, assuming the same procedure is followed in setting exogenous parameters governing the model's current account. Appendix B demonstrates that adding technology capital and locations to an otherwise standard two-country general equilibrium model has a large impact on the predicted behavior of labor productivity and net exports.

Keywords: foreign direct investment, intangible capital, current account

JEL Classification: F21, F32, F41

Suggested Citation

McGrattan, Ellen R. and Prescott, Edward C., Appendices: Technology Capital and the U.S. Current Account (April 2008). Available at SSRN: https://ssrn.com/abstract=1162856

Ellen R. McGrattan (Contact Author)

Federal Reserve Bank of Minneapolis - Research Department ( email )

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Minneapolis, MN 55480
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University of Minnesota - Twin Cities

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Minneapolis, MN 55455
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National Bureau of Economic Research (NBER)

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Edward C. Prescott

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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