Global imbalances and structural change in the United States
Abstract: Since the early 1990s, as the United States has borrowed from the rest of the world, employment in U.S. goods-producing sectors has fallen. Using a dynamic general equilibrium model, we find that rapid productivity growth in goods production, not U.S. borrowing, has been the most important driver of the decline in goods-sector employment. As the United States repays its debt, its trade balance will reverse, but goods-sector employment will continue to fall. A sudden stop in foreign lending in 2015?2016 would cause a sharp trade balance reversal and painful reallocation across sectors, but would not affect long-term structural change.
File(s): File format is application/pdf http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=5151
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Staff Report
Publication Date: 2013