Global imbalances and structural change in the United States

Timothy J. Kehoe, Kim J. Ruhl, Joseph B. Steinberg

Research output: Contribution to journalArticlepeer-review

31 Scopus citations


Since the early 1990s, as the United States borrowed heavily from the rest of the world, employment in the US goods-producing sector has fallen. We construct a dynamic general equilibrium model with several mechanisms that could generate declining goods-sector employment: foreign borrowing, nonhomothetic preferences, and differential productivity growth across sectors. We find that only 15.1 percent of the decline in goods-sector employment from 1992 to 2012 stems from US trade deficits; most of the decline is due to differential productivity growth. As the United States repays its debt, its trade balance will reverse, but goods-sector employment will continue to fall.

Original languageEnglish (US)
Pages (from-to)761-796
Number of pages36
JournalJournal of Political Economy
Issue number2
StatePublished - Apr 2018

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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