Three Current Account Balances: A "Semi-Structuralist" Interpretation / Menzie D. Chinn, Jaewoo Lee.

Format:

Book

Author/Creator:

Chinn, Menzie D.

Contributor:

National Bureau of Economic Research.

Lee, Jaewoo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11853.

NBER working paper series no. w11853

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Three Current Account Balances

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

Three large current account imbalances -- one deficit (the United States) and two surpluses (Japan and the Euro area) -- are subjected to a minimalist structural interpretation. Though simple, this interpretation enables us to assess how much of each of the imbalances require a real exchange rate adjustment. According to the estimates, a large part of the U.S. current account deficit (nearly 2 percentage points of the 2004 deficit of 5 1/2 percent of GDP) will undergo an adjustment process that involves real depreciation in its exchange rate. For Japan, a little more than 1 percentage point (of GDP) of the current account surplus is found to require an exchange rate movement (real appreciation) as the surpluses adjust down. For the Euro area, less than half a percentage point of its current account surplus is found to require an adjustment via real appreciation.

Notes:

Print version record

December 2005.