EconPapers    
Economics at your fingertips  
 

What can account for fluctuations in the terms of trade?

Marianne Baxter () and Michael Kouparitsas ()

No WP-00-25, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: Fluctuations in the terms of trade the price of a country?s exports relative to the price of its imports are a source of perennial concern to policymakers in developing countries and industrialized nations alike. Terms of trade growth is extremely volatile and can lead to sudden changes in a country?s economic health. This paper seeks to understand the sources of fluctuations in the terms of trade. We decompose a country?s terms of trade volatility into a component stemming from differences in the composition of import baskets and export baskets, which we define as a goods price effect, and a component due to cross-country differences in the price of a particular class of goods, which we call a country price effect. We ask whether the decomposition depends in a clear way on country characteristics-developed vs. less-developed; exporter of manufactured goods vs. exporter of fuels or other commodities? Our goal in this paper is twofold. First, we provide new evidence on the sources of terms of trade volatility that should be of use to policymakers, Seconds, the stylized facts that emerge from this analysis will provide guidance for economists seeking to build better models of interdependent economies.

Keywords: Trade; Business cycles (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2000/wp2000_25.pdf (application/pdf)

Related works:
Journal Article: What Can Account for Fluctuations in the Terms of Trade?* (2006) Downloads
Working Paper: What Can Account for Fluctuations in the Terms of Trade? (2000) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-00-25

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Bernie Flores ().

 
Page updated 2020-02-11
Handle: RePEc:fip:fedhwp:wp-00-25