Open AccessThe Long Run Determinants of the U.S. Trade Balance: A Reexamination Using Bi & Multivariate Cointegration Approach
Author(s) -
Amarendra Sharma
Publication year - 2012
Publication title -
research in applied economics
Language(s) - English
Resource type - Journals
ISSN - 1948-5433
DOI - 10.5296/rae.v4i1.1171
Subject(s) - cointegration , economics , balance of trade , multivariate statistics , short run , current account , econometrics , interest rate , monetary economics , balance (ability) , macroeconomics , exchange rate , statistics , mathematics , medicine , physical medicine and rehabilitation
This paper extends our understanding of the long-run determinants of the U.S. current account and trade balances. Earlier studies have recognized the long-run effects of fiscal, monetary, and commercial policy variables on the external account balances. But none of them reported the interest rate measures to be cointegrated with the external account balances. This study provides strong evidence to suggest that the various interest rate measures are also the long-run determinants of the U.S. current account and trade balances.