Clmann at gic amt posted

The U.S. Economy and Policy Though a Global Lens

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Dr. Catherine L. Mann Barbara 54 and Richard M. Rosenberg Professor of Global Finance International Business School, Brandeis University CLMann @ Brandeis.edu www.CLMann.com

Global Interdependence Center Annual Monetary and Trade Conference, LeBow School of Business, Drexell University April 16, 2014

Road Map • Real side observa-ons – Evidence for more robust growth?

• Financial side observa-ons – Evidence of return to normal market ac-vity?

• Implica-ons for – Global growth – QE exit – Dollar

US Economy Poised for Stronger Growth? (#

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Exports: Not robust in key sectors (capital goods, business services) ./01234+$$56!7$82193:$;3<;3(*$!=>$?1=32@ABC1=4$31$56!7$82193:$$ .=>(D46$E,FG$H$%$%I$=/3$H<'&$

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Houthakker-Magee: Imports and GDP Durable and persistent feature of US data

Table 3: Es+mates for ac+vity elas+ci+es for US exports and imports Data period

Method

Level of Disaggregation

Exports

Imports

income

income

Previous research:

Houthakker, Magee (1969)

Annual 1951-1966

Hooper, Johnson, Marquez (2000) Wren-Lewis and Driver (1998)

OLS

Goods and Services

0.99

1.68

Quarterly 1956-1996

ECM (SR), Johansen (LR)

Goods and Services

1.8* (SR) 0.8* (LR)

1.0* (SR) 1.8* (LR)

Quarterly 1980-1995

ECM (SR), Johansen (LR)

Goods

1.12 (SR) 1.21 (LR)

2.43 (SR) 2.36 (LR)

Our study: (Mann and Pluck) 1. GDP as income 2. Matched expenditure and matched prices

Annual 1980-2003

Source: Mann and Pluck

Country and Commodity Fixed effects, dynamic panel

Panel of 4 categories of goods

2.79** (SR) 1.44** (LR)

4.11** (SR) 2.22** (LR)

0.58** (SR) 1.19** (LR)

1.00** (SR) 1.63** (LR)

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Historical Houthakker-Magee most evident, short-run & consumer demanded imports if PCE is robust, consumer goods imports should be too

Demise of Houthakker-Magee?

Average Growth rates: Domestic vs. Imports (by matched category) Data: NIPA

GDP Imports PCE-goods

1968-2010 (ann) 2.9 6.0

2011-2013 (qtr) 2.2 2.2

3.3

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memo: PCE

3.2

2.1

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1.7

PCE-autos Auto&parts-imports

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4.4 11.2

Equipment investment Capital goods imports

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6.8 6.4

IT investment IT imports

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2.4 7.0

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