Private Saving and Terms of Trade Shocks: Evidence from Developing Countries

Jonathan Ostry and Carmen Reinhart

IMF Staff Papers, 1992, vol. 39, issue 3, 495-517

Abstract: The relationship between temporary terms of trade shocks and household saving in developing countries is examined. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock, depending on the values of the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between traded and nontraded goods. Empirical estimates of these two parameters are obtained using data from a sample of 13 developing countries, and then used to draw implications for the response of private saving to transitory terms of trade shocks.

JEL-codes: E21 F32 F41 (search for similar items in EconPapers)
Date: 1992
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Related works:
Working Paper: Saving and Terms of Trade Shocks: Evidence from Developing Countries (1992)
Working Paper: Private Saving and Terms of Trade Shocks: Evidence From Developing Countries (1991)
Working Paper: Private Saving and Terms of Trade Shocks (1991)
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