This paper seeks to understand the recent history of U.S. external imbalances by identifying the "long-run tendency" of the U.S. current account balance and investigating its behavior. The procedure that is adopted is to estimate cointegrating regressions between U.S. exports and imports of...

The monetary approach to exchange rate determination has served as a theoretical workhorse in open economy macroeconomics, yet empirical evidence concerning its validity is mixed: tests based on structural forms of the model are typically negative, while cross-equation restrictions tests based...