Terms of trade shock

Oil Prices, Terms of Trade Shocks, and Macroeconomic

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Using annual World Bank data for 1960-96 on the net barter terms of trade indices of 42 sub-Saharan countries, we calculate the length of time it typically takes for the effects of terms of trade shocks to dissipate, estimate the variability of the duration of terms of trade shocks, and measure the typical size of terms of trade shocks (see box on page 29).In contrast to the previous terms of trade literature, we highlight that the precise nature of the capital imperfection is key to the results.For plausible parameterizations we find that a 20 percent deterioration in the terms of trade may lead to a welfare loss on the order of 10 to 15 percent.Famous quotes containing the words shock and/or oil: “ Civilized society is one huge bourgeoisie: no nobleman dares now shock his greengrocer. ” —George Bernard...When credit depends not on the level of debt but on the debt to equity ratio the model naturally features dynamic effects that are not found in previous models.

Are shocks to the terms of trade shocks to productivity

Over at the typically informative MacroBusiness blog, my friend, David Llewellyn-Smith, has just published this useful little note on the terms of trade.By modeling international capital market imperfections and changes in creditworthiness during adverse terms of trade shocks, we show that transitions can involve excessive adjustment as debt decumulation overshoots its long run equilibrium to prolong the adjustment recession.However, there are marked differences across these countries in the typical duration of terms of trade shocks.The World Bank FEBRUARY 1999 NUMBER 18 ECONOMIC POLICY Managing terms of trade volatility Terms of trade shocks may slow growth, worsen the distribution of income.Terms-of-trade shock duration and national saving in the developing countries.Our framework can be generalized to other emerging markets and developing countries.

Terms‐of‐Trade Shocks and Economic Performance, 1870–1940

Seattle, WA 98195 United States 206-685-8028 (Phone) 206-543-5955 (Fax).In contrast, consider the 11 countries that typically experience very long-lived (permanent) terms of trade shocks.

University of Washington - Institute for Economic Research ( email ).Countries with long-lived negative shocks that were mistakenly perceived as temporary may have been more likely to undertake unsustainable external borrowing.

The impact of an exogenous adverse supply shock on the

Furthermore, we would expect any rises in global bond yields to be at least partly imported into Canada — with possible implications for the Canadian dollar — and with an uncertain net effect on our economy.Dealing with a terms of trade shock. Labour is also adjusting to the terms-of-trade shock.However, as we noted in our Financial System Review, financial vulnerabilities would usually translate into full-blown risks — with attendant consequences for the economy — only if there was a trigger, such as a widespread and sharp decline in economic activity and employment.

CiteSeerX — Terms of Trade Shocks and Economic Recovery

Terms of Trade Shocks and Economic Performance 1870-1940: Prebisch and Singer Revisited Yael S.

Associates of the Asper School of Business - Speech (Webcasts).Dynamic Effects of Terms of Trade Shocks: The Impact on Debt and Growth. we find that an adverse terms of trade shock leads to a decline in growth accompanied by a.As these errors are normally distributed, this implies that two-thirds of the time any change in the terms of trade is within one standard error of the initial level of the terms of trade, and one-third of the time any change is larger than one standard error.For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter).Release of the Monetary Policy Report - (Videocast) Press conference by Governor Stephen S.Understanding digital currencies and related financial technologies is an important part of our research agenda.

Consequently, a country that is an intensive exporter of nonfuel commodities, is a relatively small-scale importer of petroleum products, and has as a major export a commodity subject to short-lived price shocks (such as The Gambia, which exports groundnuts) will typically experience short-lived shocks to its terms of trade.If you have authored this item and are not yet registered with RePEc, we encourage you to do it here.If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item.See general information about how to correct material in RePEc.We find that, on average, the persistence of terms of trade shocks varies widely—for about half the sub-Saharan countries, such shocks are short lived (that is, half of the effect of the initial shock typically dissipates in less than four years) and for one-third of the countries such shocks are long lived (that is, permanent).Russia has the reserves to handle terms of trade shocks - Kudrin Published time:.Estimates of the average duration and variability of typical shocks can be used, together with episode-specific knowledge of world commodity-price movements, to form a judgment of the likely duration of a terms of trade shock.With that, Carolyn and I would now be happy to take your questions.

Are shocks to the terms of trade shocks to - DeepDyve

For example, terms of trade shocks in Mozambique last from 0.5 to 3 years, whereas shocks in Tanzania last 2 years or more.The agricultural sector is disaggregated into a food grain and vegetable sector.Terms-of-trade shock duration and national saving in the developing.The range of the duration of terms of trade shocks is also shown in Chart 1.Trade shock analysis Measuring the impact of the global shocks on trade balances via price. country would experience an unambiguous positive terms-of-trade shock.

The terms-of-trade shock in Korea - OECD Economic Surveys

It also makes it difficult to pin down the precise timing when Canada will reach full capacity with inflation sustainably at target — it could just as easily be sooner as later than projected.We also examine the implications of these results for African policymakers.We demonstrate that the deteriorated terms of trade since the mid-1990s.You have free access to this content Terms of Trade Shocks and Inflation Targeting in Emerging Market Economies.

For example, estimates of the expected duration of a positive temporary shock, however formed, are the basis for public and private decisions on the desirable rate of saving out of temporarily higher income.Let me also remind you that there are many uncertain elements and risks to our outlook, which are discussed in the MPR.The exports of sub-Saharan African countries are dominated by primary commodities, while food items, oil, and manufactured goods are their major imports.As a result of this mishandling, the gains obtained from positive terms of trade shocks have been small, while real losses from negative shocks have been large.Of particular note are the vulnerabilities associated with household debt and rising housing prices.The exports of sub-Saharan African countries are dominated by primary commodities, while food items, oil, and manufactured goods are.The values for the standard error of the regression for each country are displayed (in descending order) in Chart 2.

This history illustrates that in deciding how to use measures of the typical duration of terms of trade shocks in attempting to improve on a rule that assumes all shocks are permanent, policymakers will need to weigh their options according to the consequences, as well as the likelihood, of being wrong.Coping with Terms-of-Trade Shocks in Developing Countries November 2003 Volume 9, Number 11.

Glossary of Customs and Trade Terms

Terms of trade shocks in an intertemporal model: should we worry about the Dutch disease or excessive borrowing.Paper provided by University Library of Munich, Germany in its series MPRA Paper with number.