Are the fiscal and monetary policies of the G-7 countries effective in decreasing the U.S. trade deficit?
Hideki Nishigaki ()
Additional contact information
Hideki Nishigaki: Hitotsubashi University
Economics Bulletin, 2008, vol. 6, issue 27, 1-13
Abstract:
The U.S. trade deficit is a major concern for the G-7 countries. However, it is unclear whether their fiscal and monetary policies are effective in this regard. We examine the relationship between the U.S. trade balance and the G-7 countries' policy variables by constructing an eight-dimensional version of the structural vector autoregression (SVAR) model. Our empirical results suggest that a reduction in the U.S. fiscal deficit is not such a reliable instrument for reducing the U.S. trade imbalance. Contrastingly, monetary tightening in the U.S. can reduce its trade deficit. Non-U.S. policy shocks are ineffective, while decline in the U.S. dollar plays an important role in reducing the U.S. trade deficit.
JEL-codes: F3 (search for similar items in EconPapers)
Date: 2008-07-03
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.accessecon.com/pubs/EB/2008/Volume6/EB-08F30043A.pdf (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-08f30043
Access Statistics for this article
More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().