What Do We Really Know About the Transatlantic Current Account?

26 Pages Posted: 14 Oct 2019

See all articles by Martin T. Braml

Martin T. Braml

World Trade Organization (WTO); CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Gabriel J. Felbermayr

Kiel Institute for the World Economy

Date Written: 2019

Abstract

Do the U.S. have a current account surplus or a deficit with the EU? Since 2009, official sources disagree: The U.S. Department of Commerce claims a consistent U.S. surplus while Eurostat reports the opposite. International transactions are notoriously difficult to measure accurately, but the size of the transatlantic discrepancy is extremely substantial: over the last ten years, it has grown to a cumulated 1 Trillion USD. In times of severe trade policy disagreements across the Atlantic, this gap is obviously problematic. This paper tries to dissect the transatlantic reporting gap. Two country-pairs -- U.S.-UK and U.S.-Netherlands -- account for almost the entire transatlantic discrepancy, which, in 2017, stood at about 180 billion USD. In the former case, national statistics on net services trade disagree by as much as 55 billion USD; in the latter case, there is a reporting difference in net primary income of about 60 billion USD. In contrast, data provided by the Bundesbank for the German-U.S. current account closely mirror U.S. data. Non-random measurement error and, possibly, deliberate manipulation seem to cause the observed discrepancies.

Keywords: current account, statistical discrepancies, service trade, trade war

JEL Classification: F140, F320, H260

Suggested Citation

Braml, Martin and Felbermayr, Gabriel J., What Do We Really Know About the Transatlantic Current Account? (2019). CESifo Working Paper No. 7802, Available at SSRN: https://ssrn.com/abstract=3467935 or http://dx.doi.org/10.2139/ssrn.3467935

Martin Braml (Contact Author)

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Gabriel J. Felbermayr

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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