Global imbalances and structural change in the United States

Timothy J Kehoe, Kim J. Ruhl, Joseph B. Steinberg

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

Since the early 1990s, as the United States borrowed heavily from the rest of the world, employment in the US goods-producing sector has fallen. We construct a dynamic general equilibrium model with several mechanisms that could generate declining goods-sector employment: foreign borrowing, nonhomothetic preferences, and differential productivity growth across sectors. We find that only 15.1 percent of the decline in goods-sector employment from 1992 to 2012 stems from US trade deficits; most of the decline is due to differential productivity growth. As the United States repays its debt, its trade balance will reverse, but goods-sector employment will continue to fall.

Original languageEnglish (US)
Pages (from-to)761-796
Number of pages36
JournalJournal of Political Economy
Volume126
Issue number2
DOIs
StatePublished - Apr 1 2018

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Structural change
Global imbalances
Productivity growth
Trade balance
Trade deficit
Borrowing
Non-homothetic preferences
Dynamic general equilibrium model
Debt

Cite this

Global imbalances and structural change in the United States. / Kehoe, Timothy J; Ruhl, Kim J.; Steinberg, Joseph B.

In: Journal of Political Economy, Vol. 126, No. 2, 01.04.2018, p. 761-796.

Research output: Contribution to journalArticle

Kehoe, Timothy J ; Ruhl, Kim J. ; Steinberg, Joseph B. / Global imbalances and structural change in the United States. In: Journal of Political Economy. 2018 ; Vol. 126, No. 2. pp. 761-796.
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