Does the US Current Account Show a Symmetric Behavior over the Business Cycle?

Roberto Duncan
2015 Federal Reserve Bank of Dallas, Globalization and Monetary Policy Institute Working Papers  
>IJH=?J Traditionally, the literature that attempts to explain the link between the current account and output nds a linear negative relationship (e.g., Backus et al., 1995) . Using nonparametric regressions, we nd a robust U-shaped relationship between the U.S. current account and the GDP cycle. When output is above (below) its trend the current account and detrended output are positively (negatively) correlated. We argue that this nonlinearity might be caused by persistent productivity shocks
more » ... productivity shocks coupled with uncertainty shocks about future productivity. JEL Codes: E3, F3, F4.
doi:10.24149/gwp253 fatcat:kmdckdo6qvdcna5no5hj75hbau