A carregar...
Publicação
Long‑run relationship between the unemployment rate and the current account balance in the United States : an empirical analysis
| Nome: | Descrição: | Tamanho: | Formato: | |
|---|---|---|---|---|
| 1.19 MB | Adobe PDF |
Autores
Orientador(es)
Resumo(s)
In recent years, political rhetoric implying international trade hinder employment
has gained momentum. We argue that the dynamics between the unemployment rate
and the current account balance have both economic and political relevance. The
presence of cointegration between the unemployment rate and the current account
balance to GDP ratio and the nature of their short-run fluctuations will help us analyze
the dynamics between the two objectively to evaluate the political rhetoric. We
use quarterly data from 1948: Q1 to 2020: Q1 on the unemployment rate and current
account balance to GDP ratio in the United States. Traditional cointegration tests
fail to detect any cointegration. However, threshold cointegration tests confirm statistical
evidence of threshold cointegration between the two. The estimated threshold
vector error-correction model shows statistically significant evidence of falling
unemployment rate coupled with deteriorating current account balance. This finding
indicates that as unemployment rates go down, the current account balance deteriorates
to maintain the long-run co-movement. Arguably, as the unemployment rate
decline, concurrently imports rise faster than exports causing the current account
balance to deteriorate. This finding thereby refutes the political rhetoric.
Descrição
Palavras-chave
Unemployment rate Current account balance Threshold cointegration Threshold VECM
Contexto Educativo
Citação
Ahmed, Haydory Akbar and Tareque Nasser (2023). "Long‑run relationship between the unemployment rate and the current account balance in the United States : an empirical analysis". Portuguese Economic Journal, 22(3):397-416
Editora
Springer