TY  - JOUR
AU  - Helliwell,John F.
TI  - The Effects of Fiscal Policy on International Imbalances:  Japan and the United States
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2650
PY  - 1988
Y2  - July 1988
UR  - http://www.nber.org/papers/w2650
L1  - http://www.nber.org/papers/w2650.pdf
N1  - Author contact info:
John F. Helliwell
Vancouver School of Economics
University of British Columbia
997-1873 East Mall
Vancouver BC V6T 1Z1
CANADA
Tel: 604/822-4953
Fax: 604/822-5915
E-Mail: john.helliwell@ubc.ca
AB  - Evidence from three multicountry models is used to assess the current account effects of U.S. and Japanese fiscal policies. Asymmetries in the effects of U.S. and Japanese policies are analyzed in some detail, and attributed to differences in country size, in trade patterns (which have only a small effect) and in the extent to which induced changes in real exchange rates switch demand from domestic to foreign output. Fiscal policy has substantial current account effects in the models. For example, switching $50 billion of sustained government spending from the United States to Japan would, in the third year, improve the U.S. current account by $24 billion and worsen that of Japan by $20 billion. Induced changes in nominal exchange rates are found to play a relatively small role in determining the effects of fiscal policy on the nominal current account.
ER  -