Oil Prices and the Terms of Trade

David Backus () and Mario John Crucini ()

No 6697, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The combination of substantial terms of trade variability and unstable correlation patterns of trade prices with output and trade volumes has led some to suggest a break in the link between trade volumes and prices. We find that oil accounts for much of the variation in the terms of trade over the last twenty five years and its quantitative role varies significantly over time. And since our dynamic general equilibrium model predicts that the economy responds differently to oil supply shocks than to other shocks, changes in their relative importance help to account for the unstable correlations in the data.

JEL-codes: F41 F32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env
Date: 1998-08
Note: ITI
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Published as Journal of International Economics, (1999).

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Journal Article: Oil prices and the terms of trade (2000)
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