 North-South terms of trade: an empirical investigationNo WP-97-05, Working Paper Series, Macroeconomic Issues from Federal Reserve Bank of Chicago Abstract: My empirical analysis a reveals a strong link between the terms of trade of industrial and developing countries. I show that the terms of trade developing countries are essentially the relative prices of commodity exports and manufactured imports. Similarly, I find that terms of trade fluctuations of industrial countries are heavily influenced by movements in the relative price of manufactured exports and commodity imports. This means that improvements in the terms of trade of developing countries imply a worsening in the terms of trade of developing industrial countries, and vice versa. One example of this is the explosion of oil prices in the early 1970s. The terms of trade industrial countries worsened considerably, while the terms of trade of oil exporting countries improved dramatically. This episode led to a sizeable loss of income for industrial countries (of around 3 percent) and a sizeable gain in real income for oil exporting countries (of roughly 80 percent). Keywords: Prices; Business cycles; International trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhma:wp-97-05 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Working Paper Series, Macroeconomic Issues from Federal Reserve Bank of Chicago Contact information at EDIRC. |
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