Front Matter Page
Research Department
Authorized for distribution by Gian Maria Milesi-Ferretti
Contents
I Introduction
II The model
A Simplified version with two countries and only tradable goods
B Three country version of Obstfeld and Rogoff (2007)
1 U.S. households
2 Chinese and OEA households
3 Market clearing
III Calibration
A Trade elasticities
B Other parameters
IV Rebalancing and relative prices
A Exchange rate adjustment
B Robustness
C Change in home bias
V Introducing input-output linkages
A Evidence
B Extension of the model
C Exchange rate adjustment with input-output linkages
VI Concluding remarks
Appendices
I System of equations
List of Tables
1 Calibration
List of Figures
1 Responses to a reduction in the U.S. current account deficit
2 Sensitivity to lower U.S. elasticity between domestic and foreign goods
3 Change in home bias required to accommodate a reduction in the U.S. deficit
4 Shares of domestic and imported intermediate inputs in tradable production
5 Sensitivity to one-way IO linkages with a unilateral Chinese appreciation
6 Sensitivity to two-way IO linkages with a unilateral Chinese appreciation