Front Matter

Front Matter Page

© 2003 International Monetary Fund

August 2003

IMF Country Report No. 03/245

United States: Selected Issues

This Selected Issues paper for United States was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on July 15, 2003. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of United States or the Executive Board of the IMF.

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Front Matter Page



Selected Issues

Prepared by M. Mühleisen, R. Cardarelli, C. Faulkner-MacDonagh, A. Kose, I. Ivaschenko, V. Culiuc, and G. Ramirez (all WHD), A. Hilaire (PDR), B. Hunt (RES), C. Schnure (ICM), and D. Simard (FAD)

Approved by the Western Hemisphere Department

July 15, 2003


  • I. U.S. Household Savings: Long-Run Determinants and Short-Term Risks

    • A. Recent Trends in Household Wealth

    • B. Long-run Determinants of Consumption and Saving

    • C. Does Saving Pose A Risk to the Outlook?

  • Tables

  • I. 1. Estimates of the Consumption Cointegrating Equation

  • Figures

  • I. 1. Household Wealth and Saving Rates

  • 2. Components of Household Net Wealth

  • 3. Components of Household Net Wealth

  • 4. Personal Saving Rates

  • 5. Changes in the Personal Saving Rate

  • Appendices

  • I. Details on Data Construction

  • II. Are U.S. House Prices Overvalued?

    • A. House Price Developments: Stylized Facts

    • B. Fundamentals Supporting Current House Price Levels

    • C. Are There Reasons for Concern?

    • D. Empirical Results

  • Tables

  • II. 1. Household Balance Sheet Indicators

  • 2. Real Estate Bull and Bear Markets in Large Metropolitan Areas

  • 3. Results of Three-Stage Least Squares Regression for House Prices

  • Figures

  • II. 1. House Price Trends

  • 2. Regional House Price Developments

  • 3. Factors Affecting House Prices

  • 4. House Price-Rent Ratio

  • 5. Model Prediction of New Home Prices

  • III. Underfunding of Corporate Pension Plans: Macroeconomic and Policy Implications

    • A. Factors Underlying the Erosion of DB Plans

    • B. Pension Funding and Profits

    • C. Pension Funding and the PBGC

    • D. Pension Accounting, Valuation, and Earnings

    • E. Concluding Observations

  • Tables

  • III. 1. Defined Benefit Corporate Pension Plans: Portfolio Composition

  • 2. Funding Status of Defined Benefit Corporate Pension Plans

  • 3. Change in Funding Status of Defined Benefits Pension Plans

  • 4. Simulation of Pension Fund Finances

  • 5. Financial Status of the Pension Benefit Guarantee Corporation

  • Figures

  • III. 1. Corporate Pension Plans: Total Assets

  • 2. Defined Benefit Pension Plans: Net Purchases of Corporate Equities

  • 3. Defined Benefit Pension Plans: Capital Gains and Losses

  • IV. Domestic and International Impact of U.S. Budget Policies

    • A. The Historical Experience and Simulations of the 2004 Budget Proposal

    • B. Fiscal Deficits and Real Interest Rates

    • C. International Implications of Higher U.S. Public Debt

  • Tables

  • IV. 1. Change in Real GDP Growth Before and After Large Fiscal Expansions

  • 2. Estimates from Large-Scale Models

  • 3. Estimates from Small-Scale Models

  • 4. Survey of Selected Studies on the Impact of U.S. Deficits on Real Interest Rates

  • 5. Correlations of G-7 Real Interest Rates (1977–2002)

  • 6. Survey of Selected Studies on the Impact of World Fiscal Variables on Real Interest Rates

  • 7 OLS Regressions of Real Interest Rates on World Fiscal Variables

  • 8. Joint GMM Estimation of National Real Interest Rates Imposing Equality of Coefficients Across Equations

  • Figures

  • IV. 1. Two-Year Changes in Structural Fiscal Variables

  • 2. Impact of 2003 Tax Cuts on Labor Productivity

  • 3. World Government Net Debt to GDP Ratio and World Real Interest Rate

  • V. Budget Crisis of State and Local Governments in the United States: Will It Hinder Economic Growth?

    • A. State and Local Government Finances in the United States

    • B. Recent Developments in State and Local Government Finances

    • C. Balanced Budget Rules and Fiscal Adjustment

    • D. How Much of a Drag on Growth?

  • Tables

  • V. 1. Government Revenues, Spending, and Investment

  • 2. State and Local Governments: Composition of Receipts

  • 3. State and Local Governments: Composition of Spending and Investment, 2002

  • 4. State Government Budget Reserves

  • 5. Fiscal Impulse By Level of Government

  • Figures

  • V. 1. State and Local Governments: Current Balances

  • 2. Revenues and Expenditures of State and Local Governments

  • 3. State and Local Governments: Credit Market Debt

  • 4. State and Local Budget Balances and Spreads on SLG Debt

  • 5. Dynamic Responses of the Output Gap to Fiscal Variables

  • VI. Effects of Energy Price Shocks on the United States Economy

    • A. The Modeling Framework

    • B. Model Results

    • C. Conclusion

  • Figures

  • VI. 1. Impact of a Fifty Percent Increase in the Producer Price of Energy

  • VII. Energy Policy in the United States: The Role of Taxation

    • A. Energy Use in the United States

    • B. Energy Policy

    • C. Reducing Energy Consumption: Energy Taxation and Other Instruments

    • D. Macroeconomic Effects of Energy Taxation

  • Boxes

  • VII. 1. Energy Excise Taxes in the United States

  • Tables

  • VII. 1. Simulated Impact on the U.S. Economy of Energy Taxes

  • Figures

  • VII. 1. Energy Intensity of GDP

  • 2 Energy Intensity of GDP and Real Motor Gasoline Price, 1970–2001

  • 3. Real Prices of Premium Unleaded Gasoline

  • 4. Prices and Taxes of Premium Unleaded Gasoline

  • 5. CO2 Emissions per GDP

  • 6. Shares of Energy Consumption by Type of Fuel, 1949–2001

  • 7. Net Petroleum Imports

  • Appendices

  • VII. Recent Energy Policy Initiatives

  • VIII. Globalization and Business Cycles in the United States

    • A. Rising Global Linkages and Recent Studies

    • B. Synchronization and Changing Role of Global Factors

    • C. Concluding Remarks

  • Figures

  • VIII. 1. G-7 Countries: Trade and GDP Growth

  • 2. Processed Imports as a Share of Merchandise Exports

  • 3. Gross Private Capital Flows

  • 4. Volatility of GDP Growth in Different Periods

  • 5. Correlation of G-7 and U.S. GDP Growth in Different Periods

  • 6 Model Results: World and U.S. Country Factors

  • 7. Dynamic Factor Model: Variance Decomposition

  • IX. Economic Integration in the Americas: Lessons from NAFTA

    • A. NAFTA and Regional Trade and Financial Flows

    • B. NAFTA and the North American Business Cycle

    • C. Conclusions

  • Figures

  • IX. 1. United States and Mexico: Tariff Rates

  • 2. Trade with NAFTA Partners

  • 3. Mexico: Maquiladora Trade

  • 4. Mexico: Inflows of Foreign Direct Investment

  • 5 Mexico: Economic Developments Pre- and Post-NAFTA

  • 6. NAFTA Members: Indicators of Economic Integration

  • 7. Mexico: Volatility of Macroeconomic Aggregates

  • 8. Mexico: Impulse Response Functions

  • X. The United States and the New Regionalism/Bilateralism

    • A. Recent Developments

    • B. Issues Arising from the New Regionalism

    • C. Simulations of Free Trade Arrangements with the United States

    • D. Conclusion

  • Tables

  • X. 1. Existing and Proposed Free Trade Arrangements

  • 2. Evolution of Trade: United States and Free Trade Partners

  • 3. Simulations of Effects of Free Trade Arrangements with the United States