The Zero-root Property: Permanent vs Temporary Terms-of-trade Shocks

Olivier Cardi ()

Review of International Economics, 2007, vol. 15, issue 4, pages 782-802

Abstract: In this contribution, we show that the persistence and the time of occurrence of a terms-of-trade shock matter in determining steady-state changes: (i) a strong persistent (temporary) terms-of-trade worsening induces a long-run decline in the real expenditure greater than after a permanent disturbance; (ii) an adverse permanent shift in the terms of trade raises the real expenditure in the long run if the shock is expected to occur in the distant future. Finally, according to whether a temporary terms-of-trade worsening is anticipated or not, the current account displays a monotonic or a nonmonotonic adjustment. Copyright © 2007 The Author; Journal compilation © 2007 Blackwell Publishing Ltd.

View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/links/doi/10.1111 ... .00697.x/enhancedabs link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Zero-Root Property: Permanent vs Temporary Terms of Trade Shocks (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is edited by E. Kwan Choi

More articles in Review of International Economics from Blackwell Publishing
Series data maintained by Christopher F. Baum ().