Imbalances for the Long Run

31 Pages Posted: 5 Jan 2013

See all articles by Espen Henriksen

Espen Henriksen

Department of Financial Economics, BI Norwegian Business School

Frederic J. Lambert

International Monetary Fund (IMF)

Date Written: November 2012

Abstract

Net exports and current account balances among developed countries, which contributed to the so called “global imbalances”, are highly persistent. Despite success along many dimensions, international business 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 the data than in standard models. We document these important empirical facts about international capital flows. Further, we show that we can account for them with a parsimonious one-good two-country model with small, persistent differences in per capita GDP growth, matching those we 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. 2451/31655, Available at SSRN: https://ssrn.com/abstract=2196744

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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