Global Implications of U.S. Trade Policies for Reducing Structural Trade Imbalances

The aim of this research is to assess the international transmission of trade policies originating in the United States to its major trading partners, most of whom are members of the G20. We began by estimating twenty-one macroeconomic models of the G20 based on the national accounts (by expenditure) from the United Nations Statistical Department. The baseline scenario is based upon a Harrod-Domar model on the supply side and demand equations for household consumption, government and imports. A 21 by 21 world trade matrix was constructed from the bilateral export data also produced by the UN statistical department. This provided a mechanism to estimate the exports of the national and regional models from the trade shares. Based on the new exports, GDP is re-summed and the demand side of the economy is re-estimated. This is continued until the system convergences. The final estimates and the baseline estimates are compared to give an estimate of the impact of the change resulting from the assumptions corresponding to the import policy.