Borrowing constraints and the trade balance–output comovement

Yan Zhao

Economic Modelling, 2013, vol. 32, issue C, 34-41

Abstract: The countercyclical trade balance ratio is among the key stylized facts about open economies. The magnitude of the correlation between the trade balance and output, however, differs from country to country. In particular, the trade balance ratio is more negatively correlated with output in emerging economies than in developed economies, suggesting that the trade balance is more sensitive to output changes in the former than in the latter. This paper explores whether this difference is caused by international borrowing constraints imposed on emerging economies.

Keywords: Real business cycle; Small open economy; Borrowing constraints (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Working Paper: Borrowing constraints and the trade balance-output comovement (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:32:y:2013:i:c:p:34-41

DOI: 10.1016/j.econmod.2013.01.024

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