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Title:Long-run growth expectations and "global imbalances" PDF Logo
Authors:Hoffmann, Mathias
Krause, Michael U.
Laubach, Thomas
Issue Date:2011
Series/Report no.:CFS Working Paper 2011/01
Abstract:This paper examines to what extent the build-up of global imbalances since the mid-1990s can be explained in a purely real open-economy DSGE model in which agents' perceptions of long-run growth are based on filtering observed changes in productivity. We show that long-run growth estimates based on filtering U.S. productivity data comove strongly with long-horizon survey expectations. By simulating the model in which agents filter data on U.S. productivity growth, we closely match the U.S. current account evolution. Moreover, with household preferences that control the wealth effect on labor supply, we can generate output movements in line with the data.
Subjects:Open Economy DSGE Models
Trend Growth
Kalman Filter
Real-time Data
News and Business Cycles
JEL:E13
E32
D83
O40
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-91445
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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