The Impact of Terms of Trade Shocks on a Small Open Economy: A Stochastic Analysis

Stephen J Turnovsky

No 3916, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates the impact of change in the terms of trade on the economic performance of a small economy. Both the effects of unanticipated shocks and changes in the mean and variance of the probability distribution generating these disturbances are discussed. In all cases, the key element determining the response of the economy is the effect on the rate of growth of real wealth, to which all other real quantities are directly tied in equilibrium. Conditions for the Harberger-Laursen-Metzler effect to hold are discussed. The impact of these changes on economic welfare, as measured by expected discounted utility of the representative agent is also addressed.

Date: 1991-11
Note: ITI IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published as Journal of International Money and Finance 12, pp. 278-297 (1993).

Downloads: (external link)
http://www.nber.org/papers/w3916.pdf (application/pdf)

Related works:
Journal Article: The impact of terms of trade shocks on a small open economy: A stochastic analysis (1993)
Working Paper: The Impact of terms of Trade Shocks on a Small Open Economy: A Stochastic Analysis (1991)
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:nbr:nberwo:3916

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3916

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().