The Effects of Fiscal Policy on International Imbalances: Japan and the United States / John F. Helliwell.

Format:

Book

Author/Creator:

Helliwell, John F.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2650.

NBER working paper series no. w2650

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Effects of Fiscal Policy on International Imbalances

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1988.

Summary:

Evidence from three multicountry models is used to assess the current account effects of U.S. and Japanese fiscal policies. Asymmetries in the effects of U.S. and Japanese policies are analyzed in some detail, and attributed to differences in country size, in trade patterns (which have only a small effect) and in the extent to which induced changes in real exchange rates switch demand from domestic to foreign output. Fiscal policy has substantial current account effects in the models. For example, switching $50 billion of sustained government spending from the United States to Japan would, in the third year, improve the U.S. current account by $24 billion and worsen that of Japan by $20 billion. Induced changes in nominal exchange rates are found to play a relatively small role in determining the effects of fiscal policy on the nominal current account.

Notes:

Print version record

July 1988.