Demand and Defective Growth Patterns: The Role of The Tradable and Non-Tradable Sectors in an Open Economy | Zendy

Sandile Hlatshwayo | Zendy; Michael Spence | Zendy

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Demand and Defective Growth Patterns: The Role of The Tradable and Non-Tradable Sectors in an Open Economy

Author(s) -

Sandile Hlatshwayo,

Michael Spence

Publication year - 2014

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.104.5.272

Subject(s) - economics , aggregate demand , recession , open economy , small open economy , structural change , value (mathematics) , macroeconomics , economy , monetary economics , monetary policy , exchange rate , machine learning , computer science

This 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.

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