capital inflows financial structure and housing booms we use a panel var to study the effect of shocks to capital inflows which are identified using sign restrictions on the housing market in oecd countries to explore how effects of these shocks change with the structure of the mortgage market and the degree of mortgage securitization we allow the var coefficients to vary with mortgage market characteristics our results indicate that capital inflow shocks have a significant and positive effect on real house prices real credit available to the private sector and real residential investment the responses of these variables are stronger in countries with more developed mortgage markets and in countries where securitization is allowed

measuring program impacts on earnings and employment do unemployment insurance wage reports from employers agree with surveys of individuals this article attempts to determine whether wage records reported by employers to state unemployment insurance ui agencies provide a valid alternative to more costly retrospective sample surveys o

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

the role of application assistance and information in college decisions results from the h r block fafsa experiment growing concerns about low awareness and take up rates for government support programs like college financial aid have spurred calls to simplify the application process and enhance visibility we present results from a randomized field experiment in which low income individuals receiving tax preparation help were also offered immediate assistance and a streamlined process to complete the free application for federal student aid fafsa for themselves or their children treated participants were also provided with aid estimates that were compared against tuition cost amounts for nearby colleges the combined assistance and information treatment substantially increased fafsa submissions and ultimately the likelihood of college attendance persistence and aid receipt in particular high school seniors whose parents received the treatment were 8 percentage points more likely to have completed two years of college going from 28 to 36 during the first three years following the experiment families who received aid information but no assistance with the fafsa did not experience improved outcomes the findings suggest many other opportunities for using personal assistance to increase participation in programs that require filling out forms to become eligible jel codes i2 h4 j24 copyright 2012 oxford university press

capital flows in the euro area and target2 balances abstract this paper explores how the uneven recourse by national banking systems in the euro area to the ecb s unconventional refinancing operations that led to the accumulation of large target2 balances at the ncbs has contributed to the evolution of aggregate economic activity in important member states of the euro area for the period between 2008 and 2014 we estimate a panel var model and identify the structural shocks by means of sign restrictions our results suggest that the build up of target2 balances was driven mainly by capital flow shocks while being barely responsive to other aggregate shocks furthermore on the basis of counterfactual experiments we find that the ability to build up sizeable target2 liabilities has contributed substantially to avoiding deeper recessions in the distressed euro area member countries like spain italy ireland and portugal while to a smaller extent depressing aggregate economic activity in core member states such as germany the netherlands and finland

lending booms latin america and the world recent theories of crisis put lending booms at the root of financial collapses yet lending booms may be a natural consequence of economic development and fluctuations so are lending booms dangerous in this paper we investigate empirically this question using a broad sample of lending boom episodes over 40 years with a special eye for latin america our results indicate that 1 lending booms are often associated with i a domestic investment boom ii an increase in domestic interest rates iii a worsening of the current account iv a declines in reserves v a real appreciation vi a decline in output growth 2 typical lending booms do not increase substantially the vulnerability of the banking sector or the balance of payments comparing latin america and the rest of the world we find that latin america lending booms make the economy considerably more volatile and vulnerable to financial and balance of payment crisis

determinants of ghg reporting an analysis of global oil and gas companies corporate reporting on climate change is of increasing academic interest but is often considered solely from the firm perspective this article extends current knowledge by considering how institutional pressures influence the greenhouse gas ghg reporting practices of multinational oil and gas companies the results show that regulation under the eu emissions trading scheme and reporting according to the global reporting initiative gri guidelines leads to better quality and more extensive reporting although generally adopting proactive climate change strategies european companies do not have superior ghg reporting practices corporate media visibility does not impact ghg reporting practices which may be a reflection of the obscure portrayal of climate change in the print media or the fact that coverage is generally positive this article adds to the current literature on ghg reporting practices demonstrating that institutional theory along with stakeholder theory and legitimacy theory can give further insights into explaining the ghg reporting practices of multinational companies

the global credit boom challenges for macroeconomics and policy the recent financial crisis has put the spotlight on the rapid rise in credit which preceded it in this paper we provide an empirical and theoretical analysis of the credit boom and the macroeconomic context in which it developed we find that the boom was unusually long and associated with neither particularly strong growth nor rising inflation in the economies in which it took place we show that this type of credit and financial cycle is hard to reconcile with existing economic theory and argue that while the global savings glut may account for the cycle s initial phase other factors such as the conduct of monetary policy and perceptions of declining macroeconomic risk were more important from the mid 2000s onwards we conclude by identifying some of the challenges now facing macroeconomics and policy

housing finance and monetary policy we document three facts concerning how the structure of housing finance affects the monetary transmission mechanism first the characteristics of residential mortgage markets differ markedly across industrialized countries second the impact of monetary policy shocks to residential investment and house prices is significantly stronger in those countries with larger flexibility development of mortgage markets third the transmission to consumption is stronger only in those countries where mortgage equity release is common and mortgage contracts are predominantly of the variable rate type we then build a two sector dsge model with financial constraints to rationalize those facts

us imbalances the role of technology and policy abstract this paper investigates the role of three likely suspects in driving the steady deterioration of the us external balance us technology developments changes in the us government fiscal position and the fed s monetary policy estimating several vector autoregressions on us data over the period 1982 2 2005 4 we identify five structural shocks a multi factor productivity shock an investment specific technology shock a monetary policy shock and a fiscal revenue and spending shock together these shocks can account for the deterioration and subsequent reversal of the trade balance in the 1980s while productivity improvements and fiscal and monetary policy easing also play an important role in the rapid deterioration since 2000 these structural shocks cannot explain why the trade balance deteriorated in the second half of the 1990s

early birds late risers and sleeping beauties bank credit growth to the private sector in central and eastern europe and in the balkans abstract following a period of privatization and restructuring commercial banks in central and eastern europe and more recently in the balkans have expanded rapidly their lending to the private sector this paper studies whether these developments are consistent with a process of convergence and structural financial deepening by estimating an equilibrium level of the bank credit to gdp ratio it concluded that while there is no clear evidence that the recent increases in bank credit ratios is inconsistent with financial deepening policy makers will have to evaluate carefully its implications for macroeconomic developments and financial stability

deeds not words a cosmopolitan perspective on the influences of corporate sustainability and ngo engagement on the adoption of sustainable products in china to make a business case for corporate sustainability firms must be able to sell their sustainable products the influence that firm engagement with non governmental organizations ngos may have on consumer adoption of sustainable products has been neglected in previous research we address this by embedding corporate sustainability in a cosmopolitan framework that connects firms consumers and civil society organizations based on the understanding of responsibility for global humanity that underlies both the sustainability and cosmopolitanism concepts we hypothesize that firms sustainability engagement and their ngo engagement influence consumer adoption of sustainable products empirically we investigate the adoption of sustainable eco circle products made from recycled fibers marketed by li ning a china based global sportswear brand we apply a stepwise regression approach to test our hypotheses with paper and pencil survey data from 217 chinese consumers we find adoption to be positively associated with consumers sustainability attitude but not with firms sustainability engagement for firm ngo engagement these relationships are reversed adoption is positively associated with firm ngo engagement but not with consumers related attitude our results present a picture of the chinese context in which there is a business case for corporate sustainability if firms words about sustainable product strategies are supported by signals from civil society about firm deeds the results imply that in a chinese context firms need to be particularly aware of the role of ngos when hoping to be rewarded for sustainability

the labor market returns to community college degrees diplomas and certificates this article provides one of the first rigorous estimations of the labor market returns to community college certificates and diplomas as well as estimations of the returns to the more commonly studied associate s degrees using administrative data from kentucky we estimate panel data models that control for differences among students in precollege earnings and educational aspirations associate s degrees and diplomas have quarterly earnings returns of nearly 2 400 for women and 1 500 for men compared with much smaller returns for certificates there is substantial heterogeneity in returns across fields of study degrees diplomas and for women certificates correspond with higher levels of employment

limits of floating exchange rates the role of foreign currency debt and import structure abstract a traditional argument in favor of flexible exchange rates is that they insulate output better from real shocks because the exchange rate can adjust and stabilize demand for domestic goods through expenditure switching this argument is weakened in models with high foreign currency debt and low exchange rate pass through to import prices the present study evaluates the empirical relevance of these two factors we analyze the transmission of real external shocks to the domestic economy under fixed and flexible exchange rate regimes for a broad sample of countries in a panel var and let the responses vary with foreign currency debt and import structure we find that flexible exchange rates do not insulate output better from external shocks if the country imports mainly low pass through goods and foreign indebtedness is high

bank integration and co movements across housing markets this paper investigates whether bank integration measured by cross border bank flows can capture the co movements across housing markets in developed countries by using a spatial dynamic panel model the transmission can occur through a global banking channel in which global banks intermediate wholesale funding to local banks changes in financial conditions are passed across borders through the banks balance sheet exposure to credit currency maturity and funding risks resulting in house price spillovers while controlling for country level and global factors we find significant co movement across housing markets of countries with proportionally high bank integration bank integration can better capture house price co movements than other measures of economic integration once we account for bank exposure other spatial linkages traditionally used to account for return co movements across region such as trade foreign direct investment portfolio investment geographic proximity etc become insignificant moreover we find that the co movement across housing markets decreases for countries with less developed mortgage markets characterized by fixed mortgage rate contracts low limits of loan to value ratios and no mortgage equity withdrawal

the effects of school spending on educational and economic outcomes evidence from school finance reforms since the coleman report many have questioned whether public school spending affects student outcomes the school finance reforms that began in the early 1970s and accelerated in the 1980s caused dramatic changes to the structure of k 12 education spending in the united states to study the effect of these school finance reform induced changes in public school spending on long run adult outcomes we link school spending and school finance reform data to detailed nationally representative data on children born between 1955 and 1985 and followed through 2011 we use the timing of the passage of court mandated reforms and their associated type of funding formula change as exogenous shifters of school spending and we compare the adult outcomes of cohorts that were differentially exposed to school finance reforms depending on place and year of birth event study and instrumental variable models reveal that a 10 increase in per pupil spending each year for all 12 years of public school leads to 0 31 more completed years of education about 7 higher wages and a 3 2 percentage point reduction in the annual incidence of adult poverty effects are much more pronounced for children from low income families exogenous spending increases were associated with notable improvements in measured school inputs including reductions in student to teacher ratios increases in teacher salaries and longer school years jel codes j10 i20 h7

exploring the determinants and long term performance outcomes of corporate carbon strategies abstract so far research has insufficiently addressed the long term effectiveness of business responses to climate change in delivering actual outcomes the aim of this article is therefore to analyze the determinants of such strategies and their influence on firms financial and carbon performance over time it is argued that corporate carbon strategies have three main objectives carbon governance carbon reduction and carbon competitiveness to assess the complex interactions between these strategic objectives their determinants and outcomes an integrative structural equation model is developed and empirically tested data are sourced from a global sample of 45 leading enterprises from the steel cement and automotive sector including some of the largest ghg emitters in the world in order to account for the long term impacts of strategies the firm level change in financial and carbon performance is calculated by comparing two different points in time namely 2008 and 2013 the results provide empirical evidence for the positive effect of institutional and stakeholder pressure on emission reduction activities proof for a positive impact of carbon pressure on organizational capabilities and corporate competitiveness in the context of climate change cannot be established surprisingly the results also indicate no relationship between carbon reduction activities and long term improvements in carbon performance however such measures are linked to long term financial gains advancements in carbon performance in turn are not found to be associated with economic benefits

macro financial linkages the role of the institutional framework abstract in this paper we assess the quantitative impact of various financial shocks on the real activity and explicitly address the issue of heterogeneity in the macro financial linkages for that purpose we use var models as well as the local projection method for 18 oecd countries based on quarterly data between 1995 and 2014 we take into account three main dimensions of the institutional framework likely to explain the observed cross country heterogeneity in the propagation of financial shocks the product market regulation the employment protection and the financial structure our main findings indicate that financial shocks have a stronger impact in countries characterized by a higher competition friendly regulatory stance a stronger employment protection and a more market oriented financial structure we also show that the varieties of capitalism described by the particular mix of different institutional arrangements do not play a significant role in shaping the macro financial linkages this result suggests that although considered individually goods labor and financial markets regulations are robustly linked to macroeconomic fluctuations there is no prima facie evidence for superior performance of any given mix of institutional arrangements observed in oecd countries

how important are fixed effects and time trends in estimating returns to schooling evidence from a replication of jacobson lalonde and sullivan 2005 a substantial and rapidly growing literature has developed around estimating earnings gains from 2 year college degrees using administrative data these papers almost universally employ a person level fixed effects strategy to estimate earnings premia net of fixed attributes we note that the seminal piece on which these papers build jacobson lalonde sullivan journal of econometrics 2005 125 1 2 271 304 provides theoretical and empirical evidence for the importance of additionally differencing out individual time trends the subsequent literature has not followed suit through replication we ask whether this matters we show that it does and further that these person level time trends need not be computationally burdensome in large administrative data we recommend them as a unifying econometric standard for future work

corporate reputation and collective crises a theoretical development using the case of rana plaza banking scandals accounting fraud product recalls and environmental disasters their associated reputational effects as well as company response strategies have been well reported in the literature reported crises and scandals typically involve one focal company for example bp and the 2010 deepwater horizon accident as business practices change and company supply chains become more complex and interlinked there is a greater risk of collective crises where multiple companies are associated with the same scandal we argue that companies are likely to behave differently in a group setting compared to when faced with a crisis individually using an inductive approach we examine the case of the rana plaza building collapse we find that organizations with a history of similar crises adopt defensive strategies and communicate much later compared to organizations which adopt accommodative strategies contrary to the individual case in a collective crisis accommodative strategies result in more negative reputational damage and a higher burden of responsibility we propose that the relationship between crisis response strategy and organization reputation is moderated by the crisis setting we extend the logic of crisis management and corporate reputation to incorporate the case of a collective crisis

inflation and the uk labour market inflation is endemic in britain aside from the odd year inflation in britain has been higher than the average of the oecd countries for the last forty years this is as true for the anti inflationary 1980s as for the inflationary 1970s and the libertarian 1960s in the light of this fact we look at the problem of inflation both in general terms and in the british context furthermore we shall consider inflation from a particular point of view namely that of the labour market although it would perhaps be more apt to describe the viewpoint as the supply side

quantile treatment effects of college quality on earnings we use administrative data from texas to estimate how graduating from a state flagship or a community college relative to a nonflagship university affects the distribution of earnings we control for the selection of students across sectors using a rich set of observable ability and background characteristics and find evidence of substantial heterogeneity in the returns to quality returns increase with earnings among ut austin graduates but decline among texas a m graduates for community colleges returns are negative for lower earners but go to zero for higher earners our estimates also point to differences in the distribution of returns by race ethnicity

education decisions and labour market outcomes the financial return to a college degree is an increasing concern amid rising tuition costs and stagnant wages using the education longitudinal study of 2002 els 2002 i analyse the effect of po

how does financial liberalisation affect the influence of monetary policy on the current account abstract does the current account improve or deteriorate following a monetary policy expansion we examine this issue theoretically and empirically we show that a standard open economy dsge model predicts that the current account response to a monetary policy shock depends on the degree of financial regulation in particular financial liberalisation makes it more likely that the current account deteriorates following a monetary expansion we test this theoretical prediction with a varying coefficient bayesian panel var model where the coefficients are allowed to vary as a function of the degree of financial product and labour market regulation on data from 1976q1 2006q4 for 19 oecd countries our empirical results support the theory we therefore conclude that following a monetary policy expansion the current account is more likely to go into deficit in countries with more liberalised financial markets

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

minimum wage policy and community college enrollment patterns in this article the author studies the effect of the minimum wage on community college enrollment using cross border variation in state minimum wages to address spatial correlation in local labor

career technical education and labor market outcomes evidence from california community colleges career technical education cte programs at community colleges are increasingly seen as an attractive alternative to four year colleges yet little systematic evidence exists on the returns to specific certificates and degrees we estimate returns to cte programs using administrative data from the california community college system linked to earnings records we employ estimation approaches including individual fixed effects and individual specific trends and find average returns to cte certificate and degrees that range from 14 to 45 percent the largest returns are for programs in the healthcare sector estimated returns in non health related programs range from 15 to 23 percent end page 986 abstract from author

dynamics of the trade balance and the terms of trade the j curve the authors provide a theoretical interpretation of two features of international data the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in terms of trade but positively correlated with past movements they document the same properties in a two country stochastic growth model in which trade fluctuations reflect in large part the dynamics of capital formation the authors find that their general equilibrium perspective is essential the relation between the trade balance and the terms of trade depends critically on the source of fluctuations copyright 1994 by american economic association

drawing conclusions from structural vector autoregressions identified on the basis of sign restrictions abstract this paper discusses the problems associated with using information about the signs of certain magnitudes as a basis for drawing structural conclusions in vector autoregressions we also review available tools to solve these problems for illustration we use dahlhaus and vasishtha s 2019 study of the effects of a u s monetary contraction on capital flows to emerging markets we explain why sign restrictions alone are not enough to allow us to answer the question and suggest alternative approaches that could be used

the credit crisis conjectures about causes and remedies what caused the financial crisis that is sweeping across the world what keeps asset prices and lending depressed what can be done to remedy matters while it is too early to arrive at definite answers to these questions it is certainly time to offer informed conjectures and these are the focus of this paper this abstract was borrowed from another version of this item

mending the broken link heterogeneous bank lending rates and monetary policy pass through abstract we analyse the pass through of monetary policy measures to lending rates to households and firms in the euro area using novel bank level datasets banks characteristics such as the capital ratio exposure to domestic sovereign debt percentage of non performing loans and stability of funding structure are responsible for the heterogeneity in the pass through of conventional monetary policy changes the location of a bank is irrelevant non standard measures reduce lending rate heterogeneities banks located in financially stressed countries and with weak balance sheets are most affected banks lending margins have fallen considerably

a theory of environmental risk disclosure abstract the regulation of environmental risks increasingly emphasizes the awareness and empowerment of stakeholders the success of this approach however seems to depend crucially on the quality of environmental disclosures in this paper we investigate the amount and quality of the information that would be voluntarily delivered to some stakeholder by a potential polluter we find that information may be hazier when the stakeholder is confident or naive a priori the cost of analyzing the received reports increases little with their complexity or a polluter s net expected payoff from undertaking an industrial activity that would turn out to be unsafe is small a worried stakeholder and a low cost of producing more accurate figures on the other hand favor disclosure of high quality information by delivering information of very good quality safe firms can set themselves apart more easily from dangerous ones the higher the relative ex post payoff from their current industrial activity implications of this framework for the scope and design of public programs of environmental disclosure are briefly examined

financial structure and aggregate economic activity an overview this paper surveys literature that explores the possible links between the financial system and aggregate economic behavior the survey is in two parts the first reviews the traditional work and the second discusses new research copyright 1988 by ohio state university press

competition and credit procyclicality in european banking abstract this paper empirically assesses how competition in the banking sector affects credit procyclicality by estimating both an interacted panel var model using macroeconomic data and a single equation model with bank level data these two empirical approaches show that a deviation of actual gdp from potential gdp leads to greater credit fluctuations in economies where bank competition is weak this suggests that increased market power for banks increases the financial accelerator mechanism which is consistent with recent macroeconomic models showing that monopolistic banking tends to increase macroeconomic volatility by making credit cheaper during booms and more expensive during recessions

the structural dynamics of output growth and inflation some international evidence we examine the dynamics of output growth and inflation in the us euro area and uk using a structural time varying coefficient var there are important similarities in structural inflation dynamics across countries output growth dynamics differ swings in the magnitude of inflation and output growth volatilities and persistences are accounted for by a combination of three structural shocks changes over time in the structure of the economy are limited and permanent variations largely absent changes in the volatilities of structural shocks matter

the real exchange rate and economic growth revisiting the case using external instruments abstract we investigate the impact of movements in the real exchange rate on economic growth based on five year average data for a panel of over 150 countries in the post bretton woods period unlike previous literature we use external instruments to deal with possible reverse causality from growth to the real exchange rate our country specific instruments are i global capital flows interacted with individual countries financial openness and ii the growth rate of official reserves we find that a real appreciation depreciation reduces raises significantly annual real gdp growth more than in previous estimates in the literature however our results confirm this effect only for developing countries and for pegs

gainfully employed assessing the employment and earnings of for profit college students using administrative data we draw on population level administrative data from the u s department of education and the internal revenue service to quantify the impact of for profit college attendance on the employment and earnings of more than one million students using a matched comparison group difference in differences design we find that certificate seeking students in for profit institutions are 1 5 percentage points less likely to be employed and conditional on employment have 11 percent lower earnings after attendance than students in public institutions these results hold for both men and women and for seven of the top ten fields of study we find that earnings and employment outcomes are particularly poor for students attending for profit colleges that offer the majority of their courses online and for multicampus chains we find that for profit students experience small statistically insignificant gains in annual earnings after attendance compared to a matched end page 342 control group of young individuals who do not attend college a back of the envelope comparison of these earnings gains to average debt burdens suggests that for profit certificate programs do not pay off for the average student abstract from author

the euro area government spending multiplier at the effective lower bound abstract we build a factor augmented interacted panel vector autoregressive model of the euro area ea and estimate it with bayesian methods to compute government spending multipliers the multipliers are contingent on the overall monetary policy stance captured by a shadow monetary policy rate whether the fiscal shock occurs when the economy is at the effective lower bound elb or in normal times matters for the size of the multiplier median estimates vary conditional on the specification but the difference between multipliers at the elb and in normal times is systematically positive with very high probability over the medium run 5 years median cumulated multipliers range between 0 3 and 1 4 in normal times and between 1 6 and 2 9 at the elb we show that the results are not driven by the state of the business cycle and that the multiplier is inversely correlated with the level of the shadow monetary policy rate the econometric approach deals with several technical problems highlighted in the empirical macroeconomic literature including the issues of fiscal foresight and limited information

way station or launching pad unpacking the returns to adult technical education abstract we estimate returns to diplomas and certificates awarded to adult students by public technology centers a niche sector of higher education that elevates occupational and competency based education over transferable credits and traditional degrees technology centers cater to nontraditional students particularly adults seeking part time training in specific skills sub associate credentials arising from tennessee colleges of applied technology increase access to new industries particularly health and industrial mobility explains half of the employment returns to postsecondary diplomas and at least three quarters of the earnings returns to certificates tcat diploma completers earn 707 1034 in additional quarterly earnings over non completers similar to the returns from community college diplomas benefits extend beyond the signal value of completion students who leave without a credential fare significantly better than matched non students with a similar history of earnings

house prices capital inflows and macroprudential policy this paper evaluates the monetary and macroprudential policies that mitigate the procyclicality arising from the interlinkages between current account deficits and financial vulnerabilities we develop a two country dynamic stochastic general equilibrium dsge model with heterogeneous households and collateralised debt the model predicts that external shocks are important in driving current account deficits that are coupled with run ups in house prices and household debt in this context optimal policy features an interest rate response to credit and a ltv ratio that countercyclically responds to house price dynamics by allowing an interest rate response to changes in financial variables the monetary policy authority improves social welfare because of the large welfare gains accrued to the savers the additional use of a countercyclical ltv ratio that responds to house prices increases the ability of borrowers to smooth consumption over the cycle and is pareto improving domestic and foreign shocks account for a similar fraction of the welfare gains delivered by such a policy

asset prices exchange rates and the current account this paper analyses the role of asset prices in comparison to other factors in particular exchange rates as a driver of the us trade balance it employs a bayesian structural var model that requires imposing only a minimum of economically meaningful sign restrictions we find that equity market shocks and housing price shocks have been major determinants of the us current account in the past accounting for up to 30 of the movements of the us trade balance at a horizon of 20 quarters by contrast shocks to the real exchange rate have been less relevant explaining about 9 and exerting a more temporary effect on the us trade balance our findings suggest that large exchange rate movements may not necessarily be the key element of an adjustment of today s large current account imbalances and that in particular relative global asset price changes could be a potent source of adjustment