Intertemporal prices and the US trade balance
Author: Burda, Michael C. ; Gerlach, StefanINSEAD Area: Economics and Political ScienceIn: American Economic Review, vol. 82, no. 5, December 1992 Language: EnglishDescription: p. 1234-1253.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: The deterioration of the US merchandise trade deficit in the 1980s fell mostly on durable goods. Using a representative agent model, we show that the key distinction between the trade balance in non-durables is the role of intertemporal prices associated, for example, with an exchange rate overvaluation should therefore be expected to worsen the trade balance in durables more than in non-durables. This interpretation of the composiional changes of the US trade balance is supported by our econometric findings| Item type | Current location | Call number | Status | Date due | Barcode | Item holds |
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The deterioration of the US merchandise trade deficit in the 1980s fell mostly on durable goods. Using a representative agent model, we show that the key distinction between the trade balance in non-durables is the role of intertemporal prices associated, for example, with an exchange rate overvaluation should therefore be expected to worsen the trade balance in durables more than in non-durables. This interpretation of the composiional changes of the US trade balance is supported by our econometric findings
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