Template-Type: ReDIF-Paper 1.0 Title: Interpreting the Hours-Technology time-varying relationship Author-Name: Cristiano Cantore Author-Email: c.cantore@surrey.ac.uk Author-Name: Filippo Ferroni Author-Email: filippo.ferroni@banque-france.ac.uk Author-Name: Miguel A León-Ledesma Author-Email: M.A.Leon-Ledesma@kent.ac.uk Abstract: We investigate the time variation in the correlation between hours and technology shocks using a structural business cycle model. We propose an RBC model with a Constant Elasticity of Substitution (CES) production function that allows for capital- and labor-augmenting technology shocks. We estimate the model using US data with Bayesian techniques. In the full sample, we find (i) evidence in favor of a less than unitary elasticity of substitution (rejecting Cobb-Douglas) and (ii) a sizable role for capital augmenting shock for business cycles fluctuations. In rolling sub-samples, we document that the impact of technology shocks on hours worked varies over time and switches from negative to positive towards the end of the sample. We argue that this change is due to the increase in the elasticity of factor substitution. That is, labor and capital became less complementary throughout the sample inducing a change in the sign and size of the the response of hours. We conjecture that this change may have been induced by a change in the skill composition of the labor input. Creation-Date: 2012-01 Classification-JEL: E32; E37; C53 Keywords: Real Business Cycles models; Constant Elasticity of Substitution production function; Hours worked dynamics File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1201.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1201 Template-Type: ReDIF-Paper 1.0 Title: Back to the future: economic rationality and maximum entropy prediction Author-Name: Sylvain Barde Author-Email: S.Barde@kent.ac.uk Abstract: An information-theoretic thought experiment is developed to clarify why the maximum entropy methodology is appropriate for predicting the equilibrium state of economic systems. As a first step, object allocation problems, modeled as knapsack problems, are shown to be equivalent to congestion games under weak assumptions. This proves the existence of finite improvement paths linking initial conditions and Nash equilibria. The existence of these improvement paths is precisely what enables the use of maximum entropy to make predictions concerning the equilibrium state. Finally an illustration of this predictive power is provided through an application to the Schelling model of segregation. Creation-Date: 2012-01 Classification-JEL: C02; C11; C63; D80 Keywords: Information entropy; knapsack problem; potential function; Schelling segregation. File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1202.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1202 Template-Type: ReDIF-Paper 1.0 Title: British Economic Growth, 1270-1870: an output-based approach Author-Name: Stephen Broadberry Author-Email: S.N.Broadberry@lse.ac.uk Author-Name: Bruce Campbell Author-Email: b.m.campbell@qub.ac.uk Author-Name: Alexander Klein Author-Email: A.Klein-474@kent.ac.uk Author-Name: Mark Overton Author-Email: M.Overton@Exeter.ac.uk Author-Name: Bas van Leeuwen Author-Email: bas.vanleeuwen1@googlemail.com Abstract: This paper reconstructs GDP from the output side for medieval and early modern Britain. In contrast to the long run stagnation of living standards suggested by daily real wage rates, output-based GDP per capita exhibits modest but positive trend growth. One way of reconciling the two series is through variation in the annual number of days worked, but there are also reasons to doubt the representativeness of the sharp rise and fall of daily real wage rates in the late middle ages, which creates the impression of no trend improvement of living standards. Creation-Date: 2012-01 Classification-JEL: O11; O40; E01 Keywords: Economic Development; Economic Growth; National Income File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1203.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1203 Template-Type: ReDIF-Paper 1.0 Title: Non-Balanced Growth and Production Technology Estimation Author-Name: Miguel A León-Ledesma Author-Email: M.A.Leon-Ledesma@kent.ac.uk Author-Name: Peter McAdam Author-Name: Alpo Willman Abstract: Capital-labor substitution and TFP estimates are essential features of many economic models. Such models typically embody a balanced growth path. This often leads researchers to estimate models imposing stringent prior choices on technical change. We demonstrate that estimation of the substitution elasticity and TFP growth can be substantially biased if technical progress is thereby mis-specified. We obtain analytical and simulation results in the context of a model consistent with balanced and near-balanced growth (i.e. departures from balanced growth but broadly stable factor shares). Given this evidence, a Constant Elasticity of Substitution production function system is then estimated for the US economy. Results show that the estimated substitution elasticity tends to be significantly lower using a factor-augmenting specification (well below one). We are also able to reject conventional neutrality forms in favor of general factor augmentation with a non-negligible capital-augmenting component. Our work thus provides insights into production and supply-side estimation in balanced-growth frameworks. Creation-Date: 2012-01 Classification-JEL: C15; C32; E23; O33; O51 Keywords: Balanced Growth; Technical Progress Neutrality; Factor Income share; Constant Elasticity of Substitution; Factor-Augmenting Technical Change File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1204.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1204 Template-Type: ReDIF-Paper 1.0 Title: World Real Interest Rates: A Tale of Two Regimes Author-Name: Jagjit S. Chadha Author-Email: J.S.Chadha@kent.ac.uk Abstract: Global real interest rates were driven up in the 1980s, partly to encourage disinflation, while subsequently structural and conjunctural factors have driven rates to lower levels. The increase in the global pool of savings and the fiscal correction associated with the long economic expansion from 1992 to 2007 had put downward pressure on real rates and the extraordinary monetary policy responses since 2008 have sustained that trend into negative territory. The initial consequences of low real rates in the early part of this century had been to elevate asset prices, promote leverage in financial institutions and, as a counterparty, increase private sector indebtedness. The management of deleveraging by policymakers implies setting a low path for real rates along the yield curve by using a combination of traditional and non-traditional monetary and fiscal policies for as long as the economic dislocation persists. Facing a public and private debt overhang, low real rates help the adjustment of global balance sheets but cannot be driven low permanently by policymakers. My analysis suggests that there are two regimes for real rates; those for normal times are positive and vary with the global economic cycle, while those that deal with economic dislocation are negative. Once growth is secured, real rates will rise quickly to more normal levels, not least because, in order to limit any increase in funding costs that may result from capital inadequacy (apparent or real), banks themselves have a considerable appetite for capital, and that will also start to crank up real rates given a fixed pool of savings. It therefore seems likely that, over the medium term, real yields are likely to be in the range of 2-4%, rather than their current levels. Creation-Date: 2012-02 Classification-JEL: E31; E40; E51 Keywords: Real rates; trends; globalisation File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1205.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1205 Template-Type: ReDIF-Paper 1.0 Title: Non-Homothetic Growth Models for the Environmental Kuznets Curve Author-Name: Katsuyuki Shibayama Author-Email: K.Shibayama@kent.ac.uk Author-Name: Iain Fraser Author-Email: I.M.Fraser@kent.ac.uk Abstract: In this paper, we study the impact of the economic growth on the environment. First, we show that, at each income level, eta determines the direction of environmental degradation, where eta is the elasticity of substitution between consumption and the environment. That is, for eta large enough, as income increases people accept environmental degradation by enjoying more consumption as compensation, and vice versa. Intuitively, there are two effects operating; the income effect encourages the demand for better environmental quality simply because the environment is a normal good, whereas the substitution effect discourages it because maintaining the environment becomes more expensive as technology improvement increases the production of the general consumption good per unit of emission. The strength of the substitution effect is governed by eta. Hence, the impact of economic growth on the environment crucially depends on eta. Second, we demonstrate that exponential utility generates the environmental Kuznets curve (EKC) under a wide class of models without adding any other peculiar assumptions. Under exponential utility, eta is decreasing in income; intuitively, when a country is poor (large eta), people seek more consumption at the cost of environmental degradation, but, once it becomes rich enough (small eta), they seek increased environmental quality. Creation-Date: 2012-02 Classification-JEL: O13; Q56 Keywords: Environmental Kuznets Curve; Economic Growth; Non-Homothetic Preferences; Generalized Isoelastic Preferences File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1206.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1206 Template-Type: ReDIF-Paper 1.0 Title: Accounting for the Great Recession in the UK: Real Business Cycles and Financial Frictions Author-Name: Jagjit S. Chadha Author-Email: jsc@kent.ac.uk Author-Name: James Warren Author-Email: J.Warren@kent.ac.uk Abstract: Using the business cycle accounting (BCA) framework pioneered by Chari, Kehoe and McGratten (2006) we examine the 2008-09 recession in the UK. There has been much commentary on the financial causes of this recession, which we might have expected to shock the equation governing the intertemporal rate of substitution in consumption. However, the recession appears to have been mostly driven by shocks to the efficiency wedge in total production, rather than the intertemporal consumption, labour or spending wedge. From an expenditure perspective this result is consistent with the observed large falls in both consumption and investment during the recession. To assess this result we also simulate artificial data from a DSGE model in which asset price shocks dominate and find no strong role for the intertemporal consumption wedge using the BCA method. This result does not imply that financial frictions did not matter for the recent recession but that such frictions do not necessarily impact only on the intertemporal rate of substitution in consumption. Creation-Date: 2012-04 Classification-JEL: E31; E40; E51 Keywords: Business Cycle Accounting; Major Recessions; TFP; Financial Frictions File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1207.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1207 Template-Type: ReDIF-Paper 1.0 Title: Reserves, Liquidity and Money: An Assessment of Balance sheet Policies Author-Name: Jagjit S. Chadha Author-Email: jsc@kent.ac.uk Author-Name: Luisa Corrado Author-Email: lc242@cam.ac.uk Author-Name: Jack Meaning Author-Email: jm583@kent.ac.uk Abstract: The financial crisis and its aftermath has stimulated a vigorous debate on the use of macro-prudential instruments for both regulating the banking system and for providing additional tools for monetary policy makers. The widespread adoption of non-conventional monetary policies has provided some evidence on the efficacy of liquidity and asset purchases for offsetting the lower zero bound. Central banks have thus been reminded as to the effectiveness of extended open market operations as a supplementary tool of monetary policy. These tools are essentially fiscal instruments, as they issue central bank liabilities backed by fiscal transfers. And so having written these tools into the fiscal budget constraint, we can examine the consequences of these operations within the context of a micro-founded macroeconomic model of banking and money. We can mimic the responses of the Federal Reserve balance sheet to the crisis. Specifically, we examine the role of reserves for bond and capital swaps in stabilising the economy and also the impact of changing the composition of the central bank balance sheet. We find that such policies can significantly enhance the ability of the central bank to stabilise the economy. This is because balance sheet operations supply (remove) liquidity to a financial market that is otherwise short (long) of liquidity and hence allows other .nancial spreads to move less violently over the cycle to compensate. Creation-Date: 2012-04 Classification-JEL: E31; E40; E51 Keywords: non-conventional monetary interest on reserves; monetary and fiscal policy instruments; Basel III File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1208.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1208 Template-Type: ReDIF-Paper 1.0 Title: A Disaggregate Characterisation of Recessions Author-Name: Fabrizio Coricelli Author-Email: fabrizio.coricelli@gmail.com Author-Name: Aikaterini Karadimitropoulou Author-Email: A.Karadimitropoulou@uea.ac.uk Author-Name: Miguel A. León-Ledesma Author-Email: m.a.leon-ledesma@kent.ac.uk Abstract: The Great Recession has inspired renewed interest in analyzing the behaviour of the economy during recession episodes, and how these temporary events can shape the productive structure of the economy for long periods. Most of the existing literature focuses on recessions at the aggregate level. We provide evidence on the behavior of a large set of developed and emerging markets at the disaggregate level around recession dates. We analyze sectoral value added (VA), employment, productivity, concentration, and structural change, and whether patterns arise in a systematic way. We unveil a set of regularities in the behaviour of these variables for both sets of countries and depending on the productivity level and the level of external financial dependence of industries. We distinguish financial from normal recessions, and look at the patterns of the above variables according to the productivity level and the level of external financial dependence of industries. This study leads to a rich set of results grouped in 14 stylized facts. Most importantly, we found that recessions tend to be more industry specific events in emerging markets and economy-wide phenomena in developed economies. Moreover, the amplitude of the cycle for VA and productivity growth is larger for emerging markets. The opposite is generally true for employment growth. Also, industries with high dependence on external finance generally face higher contractions in VA growth the year of the recession, and those contractions are higher in the case of financial than in the case of normal recessions. Finally, concentration of both VA and employment is higher among emerging markets, and especially when looking at employment shares. Creation-Date: 2012-04 Classification-JEL: E32; O14; O47 Keywords: recessions; sectoral restructuring; permanent productivity effects File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1209.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1209 Template-Type: ReDIF-Paper 1.0 Title: Social Norms, Higher-Order Beliefs and the Emperor's New Clothes Author-Name: Zaki Wahhaj Author-Email: zw37@kent.ac.uk Abstract: The use of social sanctions against behaviour which contradicts a set of informal rules is often an important element in the functioning of informal institutions in traditional societies. In the social sciences, sanctioning behaviour has often been explained in terms of the internalisation of norms that prescribe the sanctions (e.g. Parsons 1951) or the threat of new sanctions against those who do not follow sanctioning behaviour (e.g. Akerlof 1976). We propose an alternative mechanism for maintaining a credible threat of social sanctions, showing that even in a population where individuals have not internalised a set of social norms, do not believe that others have internalised them, do not believe that others believe that others have internalised these norms, etc., up to a finite nth order, collective participation in social sanctions against behaviour which contradict the norms is an equilibrium if such beliefs exist at higher orders. The equilibrium can persist even if beliefs change over time, as long as the norms are believed to have been internalised at some finite nth order. The framework shows how precisely beliefs must change for the equilibrium to unravel and social norms to evolve. Creation-Date: 2012-06 Classification-JEL: D01; D02; D83; Z10 Keywords: social norms; higher-order belief; social sanctions; community enforcement; dynamics of norms; institutional change File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1210.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1210 Template-Type: ReDIF-Paper 1.0 Title: The Financial Market Impact of UK Quantitative Easing Author-Name: Francis Breedon Author-Email: f.breedon@qmul.ac.uk Author-Name: Jagjit S. Chadha Author-Email: jsc@kent.ac.uk Author-Name: Alex Waters Author-Email: aw365@kent.ac.uk Abstract: After outlining some of the monetary developments associated with Quantitative Easing (QE), we measure the impact of the UK's initial 2009-10 QE Programme on bonds and other assets. First, we use a macro-finance yield curve both to create a counterfactual path for bond yields and to estimate the impact of QE directly. Second, we analyse the impact of individual QE operations on a range of asset prices. We find that QE significantly lowered government bond yields through the portfolio balance channel by around 50 or so basis points. We also uncover significant effects of individual operations but limited pass through to other assets. Creation-Date: 2012-06 Classification-JEL: E43; E44; E47; E58 Keywords: Term Structure of Interest Rates; Monetary Policy; Quantitative Easing File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1211.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1211 Template-Type: ReDIF-Paper 1.0 Title: Deconstructing Growth - A Business Cycle Accounting Approach with application to BRICs Author-Name: Suparna Chakraborty Author-Email: schakraborty2@usfca.edu Author-Name: Keisuke Otsu Author-Email: K.Otsu@kent.ac.uk Abstract: What are the economic mechanisms that account for sudden growth spurts? Are these mechanisms similar across episodes? Focusing on the economic resurgence of the BRICs over the last decade, we employ the Business Cycle Accounting methodology developed by Chari, Kehoe and McGrattan (2007) to address these questions. Our results highlight that while efficiency wedges do contribute in a large part to growth, especially in Brazil and Russia, there is an increasing importance of investment wedge especially in the late 2000s, noted in China and India. The results are typically related to the stages of development with Brazil and Russia coming off a crisis to grow in the 2000s, while India and China were already on a stable growth path. Our conclusions are robust to alternative methodological extensions where we allow shocks to the trend component of efficiency as opposed to traditional shocks to the cyclical component, as well as to standard modifications where we allow for investment adjustment costs. Relating improvements in wedges to institutional and financial reforms, we find that financial development and improvements in effective governance in BRICs are consistent with improvements in investment and efficiency wedges that led to growth. Creation-Date: 2012-08 Classification-JEL: E32; E33 Keywords: BRIC; business cycle accounting; efficiency; market frictions; trend shocks; investment adjustment costs File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1212.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1212 Template-Type: ReDIF-Paper 1.0 Title: English Deficiency and the Native-Immigrant Wage Gap Author-Name: Alfonso Miranda Author-Email: alfonso.miranda@cide.edu Author-Name: Yu Zhu Author-Email: yz5@kent.ac.uk Abstract: We focus on the effect of English deficiency on the native-immigrant wage gap for employees in the UK using the first wave of the UK Household Longitudinal Survey (Understanding Society). We show that the wage gap is robust to controls for age, region of residence, educational attainment and ethnicity, particularly for men. However, English as Additional Language (EAL) is capable of explaining virtually all the remaining wage gap between natives and immigrants. Using the interaction of language of country of birth and age-at-arrival as instrument, we find strong evidence of a causal effect of EAL on the native-immigrant wage gap. Creation-Date: 2012-09 Classification-JEL: J15; J61 Keywords: native-immigrant wage gap; English as Additional Language (EAL); age-at-arrival File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1213.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1213 Template-Type: ReDIF-Paper 1.0 Title: Point identification in the presence of measurement error in discrete variables: application - wages and disability Author-Name: Eirini-Christina Saloniki Author-Email: es343@kent.ac.uk Author-Name: Amanda Gosling Author-Email: A.Gosling@kent.ac.uk Abstract: This paper addresses the problem of point identification in the presence of measurement error in discrete variables; in particular, it considers the case of having two "noisy" indicators of the same latent variable and without any prior information about the true value of the variable of interest. Based on the concept of the fourfold table and creating a nonlinear system of simultaneous equations from the observed proportions and predicted wages, we examine the need for different assumptions in order to obtain unique solutions for the system. We show that by imposing a simple restriction(s) for the joint misclassification probabilities, it is possible to measure the extent of the misclassification error in that specific variable. The proposed methodology is then used to identify whether people misreport their disability status using data from the British Household Panel Survey. Our results show that the probability of underreporting is greater than the probability of overreporting disability. Creation-Date: 2012-11 Classification-JEL: C14; C35; J14; J31 Keywords: measurement error; discrete; misclassification probabilities; identification; disability File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1214.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1214 Template-Type: ReDIF-Paper 1.0 Title: A Longitudinal Perspective on Higher Education Participation in the UK Author-Name: Javier Valbuena Author-Email: jv51@kent.ac.uk Abstract: This paper is based on the first seven waves of the Longitudinal Study of Young People in England (LSYPE) that allow us to follow a recent cohort of pupils from age 14 through to Higher Education (HE) participation at age 19/20. Therefore, our approach involves using rich individual data that have been linked to school level information and geographic markers to examine some of the factors determining HE participation for individuals who were in Year 11 in 2005/06 and who could therefore first enter HE in 2008/2009. Our results indicate that differences in HE participation (including studying a science degree and attending prestigious universities) between students coming from advantaged and disadvantaged backgrounds are large and that much of the socio-economic gap in HE participation rates is driven by particularly low participation rates for students at the bottom of the income distribution. However, when we introduce controls for prior educational attainment, student’s expectations towards university, academic results during secondary schooling and type of school attended these gaps in participation are substantially reduced. Our analysis suggests that one of the main challenges to widening participation for pupils from poorer socio-economic backgrounds is early policy interventions at, say, age 11 as they are likely to have an im portant effect in HE participation. Also, relatively later intervention (at ages 14 to 16) aiming at improving educational aspirations of teenagers and targeting better GCSEs results will further close the gap. Creation-Date: 2012-11 Classification-JEL: I21; I28; J11 Keywords: Education inequality; family background; higher education File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1215.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1215 Template-Type: ReDIF-Paper 1.0 Title: Fiscal Decentralisation, Local Institutions and Public Goods Provision: Evidence from Indonesia Author-Name: Sarmistha Pal Author-Email: s.pal@surrey.ac.uk Author-Name: Zaki Wahhaj Author-Email: Z.Wahhaj@kent.ac.uk Abstract: Using data from the Indonesian Family Life Surveys, this paper studies the impact of fiscal decentralisation in Indonesia on local public spending across communities with different types of local institutions. Our results provide evidence of heterogeneity in access to public goods across communities in the period prior to fiscal decentralisation; with significantly greater spending on schools and health centres in communities which observe traditional adat laws (which promote an ethic of mutual cooperation), and less spending on roads, public transport, communications etc. in communities which have a democratic electoral system. Fiscal decentralisation led to an increase in the share of spending on physical infrastructure, as well as a convergence in spending across communities with different types of local institutions. We develop a theoretical model to argue that communities which enjoy a higher level of mutual cooperation would benefit less from investment in public goods which facilitate communication and exchange with outsiders - as these improve the outside options of community members and therefore makes it more difficult to sustain intra-community cooperation. Surprisingly, investment in communications and transport infrastructure in these communities were more restrained during the period of centralised fiscal control. Creation-Date: 2012-12 Classification-JEL: D02; H41; O43 Keywords: Decentralisation; Democratisation; Mutual co-operation; Social and physical infrastructure; Local public spending; Indonesia File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1216.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1216 Template-Type: ReDIF-Paper 1.0 Title: Investigating Global Imbalances: Empirical Evidence from a GVAR Approach Author-Name: Timo Bettendorf Author-Email: T.Bettendorf@kent.ac.uk Abstract: This paper investigates the development of external imbalances from an international perspective by estimating a Global VAR model for the period 1981Q1-2009Q4 with a setup close to that of an international real business cycle model. The model considers 28 countries of which 10 are aggregated as the Eurozone. We compute generalized impulse response functions, as well as generalized forecast error variance decompositions, in order to measure the effects of shocks on international trade balances. The United States, Eurozone and China are considered as the sources of those shocks. We account for imbalances using real GDP, real effective exchange rates (REER) and real interest rates (RIR) as well as the oil price. Overall, we find evidence for the joint dynamics of our variables as drivers of the imbalances and relate our findings to theories of Global Imbalances. We show that real GDP is a relatively unimportant variable compared to the REER, RIR and the oil price. Moreover, we provide a counterfactual analysis of the US trade balance. Creation-Date: 2012-12 Classification-JEL: F10; F32; F41 Keywords: Global Imbalances; Global VAR; International Trade; Open Economy Macroeconomics File-URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1217.pdf File-Format: application/pdf Handle: RePEc:ukc:ukcedp:1217