NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Global Rebalancing with Gravity: Measuring the Burden of Adjustment

Robert Dekle, Jonathan Eaton, Samuel Kortum

NBER Working Paper No. 13846
Issued in March 2008
NBER Program(s):   IFM   ITI

We use a forty-two country model of production and trade to assess the implications of eliminating current account imbalances for relative wages, relative GDP's, real wages, and real absorption. How much relative GDP's need to change depends on flexibility of two forms: factor mobility and the adjustment in sourcing of imports, with more flexibility requiring less change. At the extreme, US GDP falls by 30 percent relative to the world's. Because of the pervasiveness of nontraded goods, however, most domestic prices move in parallel with relative GDP, so that changes in real GDP are small.

download in pdf format
   (262 K)

email paper

This paper is available as PDF (262 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Robert Dekle & Jonathan Eaton & Samuel Kortum, 2008. "Global Rebalancing with Gravity: Measuring the Burden of Adjustment," IMF Staff Papers, Palgrave Macmillan Journals, vol. 55(3), pages 511-540, July.

Users who downloaded this paper also downloaded these:
Dekle, Eaton, and Kortum w13035 Unbalanced Trade
Eaton and Kortum w12385 Innovation, Diffusion, and Trade
Eaton, Kortum, Neiman, and Romalis w16666 Trade and the Global Recession
Faruqee, Laxton, Muir, and Pesenti w11583 Smooth Landing or Crash? Model-Based Scenarios of Global Current Account Rebalancing
Arkolakis, Costinot, and Rodriguez-Clare w15628 New Trade Models, Same Old Gains?
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us