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Title:How important is China for the US exchange rate and current account? PDF Logo
Authors:Buzaushina, Almira
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Trade, Capital Account and Currency Crises B7-V3
Abstract:The purpose of this paper is to investigate New Open Economy Macroeconomics in an empirical way in order to analyze the ability of these models in explaining key variables: exchange rate and current account. A standard two-country dynamic stochastic general equilibrium model with nominal rigidities and imperfect competition is estimated using the maximum likelihood procedure. In contrast to previous literature, the estimation methods are fitted to the data of the USA and its main trading partners, including China and Mexico. The estimation results show that the consideration of the data for these countries on the opposite side of the US is important for explaining the US current account and exchange rate movements, as well as for getting confident estimates for some deep parameters which are controversial in the theoretical literature.
Subjects:New Open Economy Macroeconomics
Maximum Likelihood Estimation
JEL:F00
F41
F40
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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