Erceg, Christopher J.; Guerrieri, Luca; Gust, Christopher J. - 2006
speciflcation is that a shock
that raises foreign investment by one percentage point of GDP has a much larger
efiect on the U ….S. trade balance than a shock that boosts foreign consumption by one
percentage point of GDP. Moreover, the foreign investment … shock is associated with
a larger export expansion, and much smaller depreciation of the real exchange rate.
This contrasts …