'Imbalances' for the Long Run

31 Pages Posted: 23 Dec 2012

See all articles by Espen Henriksen

Espen Henriksen

Department of Financial Economics, BI Norwegian Business School

Frederic J. Lambert

International Monetary Fund (IMF)

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Date Written: November 2012

Abstract

Net exports and current account balances among developed countries,which contributed to the so called “global imbalances”, arehighly persistent. Despite success along many dimensions, internationalbusiness cycle models have difficulty replicating these salient,low-frequency features of international capital flows. In particular,net exports and current account balances are much more persistent in thedata than in standard models. We document these important empiricalfacts about international capital flows. Further, we show that we canaccount for them with a parsimonious one-good two-country model withsmall, persistent differences in per capita GDP growth, matching thosewe observe among developed countries.

Keywords: net exports, current account, technology shocks

Suggested Citation

Henriksen, Espen and Lambert, Frederic J., 'Imbalances' for the Long Run (November 2012). NYU Working Paper No. , Available at SSRN: https://ssrn.com/abstract=2193227

Espen Henriksen (Contact Author)

Department of Financial Economics, BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

Frederic J. Lambert

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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