Demand and Defective Growth Patterns: The Role of the Tradable and Non-tradable Sectors in an Open Economy
AbstractThis paper examines the underlying structural elements of US growth patterns, pre- and post-crisis. Prior to the recession, the US economy exhibited a defective growth pattern driven by outsized domestic demand. As domestic aggregate demand retreats to more sustainable levels relative to total income, the tradable side of the economy is a catalyst for restoring strong growth. A structural rebalancing is already underway; although it is only a third of the economy, the tradable sector generated more than half of gross gains in value-added since the start of the recovery. However, distributional issues loom on the horizon.
CitationHlatshwayo, Sandile, and Michael Spence. 2014. "Demand and Defective Growth Patterns: The Role of the Tradable and Non-tradable Sectors in an Open Economy." American Economic Review, 104 (5): 272-77. DOI: 10.1257/aer.104.5.272
- E23 Macroeconomics: Production
- E32 Business Fluctuations; Cycles
- F43 Economic Growth of Open Economies
- G01 Financial Crises