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Investigating Global Imbalances: Empirical evidence from a GVAR approach

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  • Bettendorf, Timo

Abstract

This paper investigates the development of external imbalances from an international perspective by estimating a Global VAR model. Specifically, we simulate the effects of shocks to relevant macroeconomic variables in the United States and the oil price on international trade balances and quantify the relative importance of these shocks using variance decompositions. Overall, we find evidence for the joint dynamics of our variables as drivers of the imbalances and provide further evidence for different hypotheses of Global Imbalances. The results suggest that shocks to US’ real GDP, real stock prices and the oil price are of particular importance for international trade balances and may thus be interpreted as support for parts of the global saving glut hypothesis as well as the international wealth channel.

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  • Bettendorf, Timo, 2017. "Investigating Global Imbalances: Empirical evidence from a GVAR approach," Economic Modelling, Elsevier, vol. 64(C), pages 201-210.
    • Handle: RePEc:eee:ecmode:v:64:y:2017:i:c:p:201-210
    DOI: 10.1016/j.econmod.2017.03.033
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    More about this item

    Keywords

    Global Imbalances; Global var; International trade; Open economy macroeconomics;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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