The growing trade imbalances between the United States and East Asia have triggered controversial debates on the global imbalances since the new millenium. Previous contributions have explained the trade imbalances as uni-directional causalities running either from East Asia to the United States or vice versa. This paper proposes reverse causality and mutual interest rather than uni-directional exogeneity as explanations for the transpacific trade imbalances. Applying panel GMM estimators this study finds econometric evidence for an endogeneity of the transpacific trade imbalances. The specific roles of ten East Asian countries within the transpacific imbalance dynamics are identified by asymmetric interaction terms. The estimations reveal a significant impact of U.S. macro policies and East Asian interventions in the foreign exchange markets on the transpacific trade imbalances.
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