TY  - JOUR
AU  - Chinn,Menzie D.
AU  - Lee,Jaewoo
TI  - Three Current Account Balances: A "Semi-Structuralist" Interpretation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11853
PY  - 2005
Y2  - December 2005
UR  - http://www.nber.org/papers/w11853
L1  - http://www.nber.org/papers/w11853.pdf
N1  - Author contact info:
Menzie D. Chinn
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-7397
Fax: 608/262-2033
E-Mail: mchinn@lafollette.wisc.edu

Jaewoo Lee
Research Department
International Monetary Fund
Washington DC, 20431
E-Mail: jlee3@imf.org
AB  - Three large current account imbalances -- one deficit (the United States) and two surpluses (Japan and the Euro area) -- are subjected to a minimalist structural interpretation. Though simple, this interpretation enables us to assess how much of each of the imbalances require a real exchange rate adjustment. According to the estimates, a large part of the U.S. current account deficit (nearly 2 percentage points of the 2004 deficit of 5 1/2 percent of GDP) will undergo an adjustment process that involves real depreciation in its exchange rate. For Japan, a little more than 1 percentage point (of GDP) of the current account surplus is found to require an exchange rate movement (real appreciation) as the surpluses adjust down. For the Euro area, less than half a percentage point of its current account surplus is found to require an adjustment via real appreciation.
ER  -