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

41 Pages Posted: 29 Mar 2009

See all articles by Pietro Cova

Pietro Cova

Bank of Italy

Massimiliano Pisani

Bank of Italy

Nicoletta Batini

International Monetary Fund (IMF)

Alessandro Rebucci

Johns Hopkins University - Carey Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: March 2009

Abstract

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.

Keywords: Payments imbalances, United States, European Union, Japan, Developed countries, Productivity, Balance of trade, Economic models, Time series, Cross country analysis

Suggested Citation

Cova, Pietro and Pisani, Massimiliano and Batini, Nicoletta and Rebucci, Alessandro, Global Imbalances: The Role of Non-Tradable Total Factor Productivity in Advanced Economies (March 2009). IMF Working Papers, Vol. , pp. 1-39, 2009. Available at SSRN: https://ssrn.com/abstract=1369466

Pietro Cova

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Massimiliano Pisani

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Nicoletta Batini

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Alessandro Rebucci

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://carey.jhu.edu/faculty-research/faculty-directory/alessandro-rebucci-phd

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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