Terms-of-Trade Shocks are Not all Alike

Luciana Juvenal
Authors registered in the RePEc Author Service: Ivan Petrella and Federico Di Pace

No 2020/280, IMF Working Papers from International Monetary Fund

Abstract: When analyzing terms-of-trade shocks, it is implicitly assumed that the economy responds symmetrically to changes in export and import prices. Using a sample of developing countries our paper shows that this is not the case. We construct export and import price indices using commodity and manufacturing price data matched with trade shares and separately identify export price, import price, and global economic activity shocks using sign and narrative restrictions. Taken together, export and import price shocks account for around 40 percent of output fluctuations but export price shocks are, on average, twice as important as import price shocks for domestic business cycles.

Keywords: Commodity Prices; Business Cycles; World Shocks; WP; price shock; terms-of-trade shock; import share; export share; export price shock; import price shock; share exhibit (search for similar items in EconPapers)
Pages: 61
Date: 2020-12-11
New Economics Papers: this item is included in nep-int and nep-mac
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Terms-of-trade shocks are not all alike (2021)
Working Paper: Terms-of-Trade Shocks are Not all Alike (2020)
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