With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and...

With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and...

Net exports and current account balances among developed countries,which contributed to the so called “global imbalances”, arehighly persistent. Despite success along many dimensions, internationalbusiness cycle models have difficulty replicating these salient,low-frequency features of...

Net exports and current account balances among developed countries, which contributed to the so called “global imbalances”, are highly persistent. Despite success along many dimensions, international business cycle models have difficulty replicating these salient, low-frequency features of...

Net exports and current account balances among developed countries,which contributed to the so called “global imbalances”, arehighly persistent. Despite success along many dimensions, internationalbusiness cycle models have difficulty replicating these salient,low-frequency features of...

During the 1990s, asset prices increased significantly in North America and Western Europe and in particular in the United States. This surge in asset prices coincided with the baby boom generation entering its peak earnings and savings years. We use an OLG model with production to ask whether...

We document that at business cycle frequency, nominal variables, such as aggregate price levels and nominal interest rates, are more correlated across countries than real output. Since national central banks control the domestic money supply and their objective has been to keep the nominal...

One of the most well-known puzzles in international economics is the Lucas paradox: Why doesn't capital flow from rich to poor countries? Given the low capital-output ratios in developing countries, the difference in unconditional expected returns from investing there rather than in developed...