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The Impact Of Terms Of Trade Shocks On A Small Open Economy
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Book Synopsis The Impact of Terms of Trade Shocks on a Small Open Economy by : Stephen J. Turnovsky
Download or read book The Impact of Terms of Trade Shocks on a Small Open Economy written by Stephen J. Turnovsky and published by . This book was released on 1991 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact of change in the terms of trade on the economic performance of a small economy. Both the effects of unanticipated shocks and changes in the mean and variance of the probability distribution generating these disturbances are discussed. In all cases, the key element determining the response of the economy is the effect on the rate of growth of real wealth, to which all other real quantities are directly tied in equilibrium. Conditions for the Harberger-Laursen-Metzler effect to hold are discussed. The impact of these changes on economic welfare, as measured by expected discounted utility of the representative agent is also addressed.
Book Synopsis A Noteon Terms of Trade Shocks and the Wage Gap by : International Monetary Fund
Download or read book A Noteon Terms of Trade Shocks and the Wage Gap written by International Monetary Fund and published by International Monetary Fund. This book was released on 2010-12-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a skilled-intensive non-tradable sector we show that improvements in the terms of trade benefit skilled workers. We also show that this relation holds at the industry level: the wage gap widens in skilled-intensive sectors while it shrinks in unskilled-intensive ones, the more so as terms of trade volatility decreases.
Book Synopsis Open Economy Macroeconomics by : Martín Uribe
Download or read book Open Economy Macroeconomics written by Martín Uribe and published by Princeton University Press. This book was released on 2017-04-04 with total page 646 pages. Available in PDF, EPUB and Kindle. Book excerpt: A cutting-edge graduate-level textbook on the macroeconomics of international trade Combining theoretical models and data in ways unimaginable just a few years ago, open economy macroeconomics has experienced enormous growth over the past several decades. This rigorous and self-contained textbook brings graduate students, scholars, and policymakers to the research frontier and provides the tools and context necessary for new research and policy proposals. Martín Uribe and Stephanie Schmitt-Grohé factor in the discipline's latest developments, including major theoretical advances in incorporating financial and nominal frictions into microfounded dynamic models of the open economy, the availability of macro- and microdata for emerging and developed countries, and a revolution in the tools available to simulate and estimate dynamic stochastic models. The authors begin with a canonical general equilibrium model of an open economy and then build levels of complexity through the coverage of important topics such as international business-cycle analysis, financial frictions as drivers and transmitters of business cycles and global crises, sovereign default, pecuniary externalities, involuntary unemployment, optimal macroprudential policy, and the role of nominal rigidities in shaping optimal exchange-rate policy. Based on courses taught at several universities, Open Economy Macroeconomics is an essential resource for students, researchers, and practitioners. Detailed exploration of international business-cycle analysis Coverage of financial frictions as drivers and transmitters of business cycles and global crises Extensive investigation of nominal rigidities and their role in shaping optimal exchange-rate policy Other topics include fixed exchange-rate regimes, involuntary unemployment, optimal macroprudential policy, and sovereign default and debt sustainability Chapters include exercises and replication codes
Book Synopsis Foreign Prices Shocks in a Small Open Economy by : Marías Halldór Gestsson
Download or read book Foreign Prices Shocks in a Small Open Economy written by Marías Halldór Gestsson and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Transitory Terms-of-trade Shocks and the Current Account by : Maurice Obstfeld
Download or read book Transitory Terms-of-trade Shocks and the Current Account written by Maurice Obstfeld and published by . This book was released on 1982 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper uses an intertemporal perfect-foresight optimizing model to analyze the effect of transitory terms-of-trade shocks on a small open . economy's current-account and utility time profiles. An adverse terms-of-trade shift known to be temporary induces the economy to run down its stock of external assets in the period before the terms of trade revert to their initial level. Subsequently, the assets consumed during this period are reaccumulated. The current-account response is due only in part to a desire to smooth out the future consumption stream. In addition, households know that the real value of any debt incurred while the terms of trade are unfavorable will be reduced sharply when the terms of trade improve. This opportunity for intertemporal price speculation causes the time path of instantaneous utility to be discontinuous,
Book Synopsis The Terms of Trade and Economic Fluctuations by : Mr.Enrique G. Mendoza
Download or read book The Terms of Trade and Economic Fluctuations written by Mr.Enrique G. Mendoza and published by International Monetary Fund. This book was released on 1992-11-01 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: A three-good, stochastic intertemporal equilibrium model of a small open economy is used to examine the link between terms of trade and business cycles. Equilibrium co-movements of model economies representing industrial and developing countries are computed and compared with the stylized facts of 30 countries. The results show that terms-of-trade shocks account for half of observed output variability and that the model mimics the Harberger-Laursen-Metzler effect and produces large deviations from purchasing power parity. The elasticity of substitution between tradable and nontradable goods and the persistence of the shocks play a key role in producing these results.
Book Synopsis Terms of Trade Shocks and the Current Account by : Mr.Paul Cashin
Download or read book Terms of Trade Shocks and the Current Account written by Mr.Paul Cashin and published by International Monetary Fund. This book was released on 1998-12-01 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relationship between terms of trade shocks, private saving, and the current account position. The relationship between these variables is theoretically ambiguous: an adverse transitory terms of trade shock can either induce a deterioration or an improvement in the current account, depending on whether the resulting income effects are greater or less than the resulting substitution effects. The substitution effects involve both intertemporally substituting consumption and intratemporally substituting consumption between importables and nontradables. The relative strength of these substitution effects is estimated using data for five OECD countries during 1970/95; both are found to exert large and significant effects on the current account balance.
Book Synopsis Dynamic Effects of a Terms-of-trade Shock on a Small Open Economy by : Baekin Cha
Download or read book Dynamic Effects of a Terms-of-trade Shock on a Small Open Economy written by Baekin Cha and published by . This book was released on 1993 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Terms-of-Trade Shocks and Exchange Rate Regimes in a Small Open Economy by : Wai-Mun Chia
Download or read book Terms-of-Trade Shocks and Exchange Rate Regimes in a Small Open Economy written by Wai-Mun Chia and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the impact of terms-of-trade shocks on key macroeconomic variables by numerically solving a dynamic stochastic general equilibrium model of a small open economy. The model considers nominal price rigidity under different exchange rate regimes. The numerical solutions obtained are consistent with the empirical regularities documented by Broda (2004), in which output responses to shocks are smoother in floats than in pegs; in moving from pegs to floats, the rise in nominal exchange rate volatility is coupled by the rise in real exchange rate volatility; and in both exchange rate regimes, net foreign assets is the most volatile variable.
Book Synopsis Terms of Trade Shocks and Structural Adjustment in a Small Open Economy by : Mohsen Fardmanesh
Download or read book Terms of Trade Shocks and Structural Adjustment in a Small Open Economy written by Mohsen Fardmanesh and published by . This book was released on 1985 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzes the impact of an oil boom caused by price increases on the sectoral structure and real purchasing power of workers in an oil-exporting 'small' open economy, and ascertains the effectiveness of economic policies in influencing the impact of the boom.
Book Synopsis Terms of Trade, Productivity, and the Real Exchange Rate by : Jose De Gregorio
Download or read book Terms of Trade, Productivity, and the Real Exchange Rate written by Jose De Gregorio and published by . This book was released on 1994 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the effects of terms of trade movements and productivity differentials across sectors on the behavior of the real exchange rate. We develop a simple model of a small open economy producing exportable and nontradable goods and consuming importable and nontradable goods and present empirical evidence for a sample of fourteen OECD countries. The evidence broadly supports the predictions of the model, namely that faster productivity growth in the tradable relative to the nontradable sector and an improvement in the terms of trade induce a real appreciation.
Book Synopsis Terms of Trade Shocks and Economic Recovery by : Norbert Funke
Download or read book Terms of Trade Shocks and Economic Recovery written by Norbert Funke and published by International Monetary Fund. This book was released on 2008 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper identifies factors that contribute to a fast recovery in growth after persistent negative terms of trade shocks, using a sample of 159 countries for 1970-2006. The results suggest that policies matter. Fast recoveries are fairly robustly related to real exchange rate depreciation and improvements in government stability and the institutional environment. A timely increase in aid may also support recovery.
Book Synopsis Monetary Consequences of Terms of Trade Shocks and Capital Flows in Small Open Economics by : Chandima Mendis
Download or read book Monetary Consequences of Terms of Trade Shocks and Capital Flows in Small Open Economics written by Chandima Mendis and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Terms of Trade Shocks and Structural Adjustment in a Small Open Economy by : Mohsen Fardmanesh
Download or read book Terms of Trade Shocks and Structural Adjustment in a Small Open Economy written by Mohsen Fardmanesh and published by . This book was released on 1985 with total page 131 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Terms-of-trade Shocks and Optimal Investment by : Luis Serven
Download or read book Terms-of-trade Shocks and Optimal Investment written by Luis Serven and published by World Bank Publications. This book was released on 1999 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: February 1995 Conventional analyses of the effect of terms-of-trade shocks provide a misleading view of their impact on investment and the current account, because capital goods imports are excluded from the analytical framework -- an exclusion both arbitrary and unrealistic. Conventional analyses of the effect of terms-of-trade shocks provide a misleading view of their impact on investment and the current account, says Serven, because capital goods imports are excluded from the analytical framework. He argues that such an exclusion is both arbitrary and unrealistic. Serven reexamines the consequences of permanent and transitory changes in the terms of trade in a rational-expectations model of a small open economy with intertemporally optimizing agents, and with trade in both consumption and capital goods. In this framework, the response to a permanent terms of trade improvement is unambiguous: The long-run capital stock, and thus investment, must rise, and the current account must deteriorate -- exactly the opposite of the Laursen-Metzler effect. A transitory improvement in the terms of trade raises saving but has an uncertain effect on investment. So, the impact on the current account is generally ambiguous and is shown to depend on three factors: the import contents of consumption and investment, the duration of the windfall, and the degree of intertemporal substitutability in both consumption and investment. This paper -- a product of the Macroeconomics and Growth Division, Policy Research Department -- is part of a larger effort in the department to understand the macroeconomic impact of policy shifts and external shocks. The author may be contacted at [email protected].
Book Synopsis The Balance of Trade, the Terms of Trade, and the Real Exchange Rate by : International Monetary Fund
Download or read book The Balance of Trade, the Terms of Trade, and the Real Exchange Rate written by International Monetary Fund and published by International Monetary Fund. This book was released on 1988-01-01 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses an intertemporal optimizing model of a small open economy to analyze how terms of trade changes affect real exchange rates and the trade balance. We consider temporary current, anticipated future, and permanent changes in the terms of trade. The results suggest that the relationship between the terms of trade and the current account (the so-called Harberger-Laursen-Metzler effect) may be quite sensitive to whether or not the model incorporates nontraded goods. Thus, the real exchange rate may be an important variable through which terms of trade shocks are transmitted to the current account.
Book Synopsis A Noteon Terms of Trade Shocks and the Wage Gap by : International Monetary Fund
Download or read book A Noteon Terms of Trade Shocks and the Wage Gap written by International Monetary Fund and published by . This book was released on 2010 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a skilled-intensive non-tradable sector we show that improvements in the terms of trade benefit skilled workers. We also show that this relation holds at the industry level: the wage gap widens in skilled-intensive sectors while it shrinks in unskilled-intensive ones, the more so as terms of trade volatility decreases.
