Replication data for: What Drives US Foreign Borrowing? Evidence on the External Adjustment to Transitory and Permanent Shocks

Principal Investigator(s): View help for Principal Investigator(s) Giancarlo Corsetti; Panagiotis T. Konstantinou

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Project Citation:

Corsetti, Giancarlo, and Konstantinou, Panagiotis T. Replication data for: What Drives US Foreign Borrowing? Evidence on the External Adjustment to Transitory and Permanent Shocks. Nashville, TN: American Economic Association [publisher], 2012. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-11. https://doi.org/10.3886/E112506V1

Project Description

Summary: The joint dynamics of US net output, consumption, and (the market value of) foreign assets and liabilities, characterized empirically following Lettau and Ludvigson (2004), is shown to be consistent with current account theory. US consumption is virtually insulated from transitory shocks, while these contribute to variations in net output and gross foreign positions—consumption is smoothed against temporary fluctuations in returns. A single permanent shock—naturally interpreted as a supply shock—raises consumption swiftly while causing net output to adjust gradually. This leads to persistent, procyclical external deficits, while moving gross assets and liabilities in the same direction. (JEL E21, E23, F32, F34)

Scope of Project

JEL Classification:
      E21 Macroeconomics: Consumption; Saving; Wealth
      E23 Macroeconomics: Production
      F32 Current Account Adjustment; Short-term Capital Movements
      F34 International Lending and Debt Problems

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V1 [2019-10-11]

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