Savings and the Terms of Trade under Borrowing Constraints
Savings and the Terms of Trade under Borrowing Constraints:

June 2000 - When households face the possibility of borrowing constraints in bad times, favorable movements in the permanent component of the terms of trade may lead to higher rates of private savings. Agénor and Aizenman examine the extent to which permanent terms-of-trade shocks have an asymmetric...

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Hauptverfasser: Agénor, Pierre-Richard 1957- (VerfasserIn), Aizenman, Joshua 1949- (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C The World Bank 1999
Schlagworte:
Arbitrage
Capital Markets
Consumers
Consumption
Economic Theory and Research
Emerging Markets
Exports
Finance and Financial Sector Development
Financial Literacy
Income
Liquidity
Macroeconomic Shocks
Macroeconomics
Macroeconomics and Economic Growth
Marginal Utility
Open Economy
Permanent Income
Political Economy
Prices
Private Sector Development
Real GDP
Real Interest Rate
Savings
Trade
Utility
Variables
Welfare
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Zusammenfassung:June 2000 - When households face the possibility of borrowing constraints in bad times, favorable movements in the permanent component of the terms of trade may lead to higher rates of private savings. Agénor and Aizenman examine the extent to which permanent terms-of-trade shocks have an asymmetric effect on private savings. Using a simple three-period model, they show that if households expect to face binding constraints on borrowing in bad states of nature (when the economy is in a long trough rather than a sharp peak), savings rates will respond asymmetrically to favorable movements in the permanent component of the terms of trade-in contrast with the predictions of conventional consumption-smoothing models. They test for asymmetric effects of terms-of-trade disturbances using an econometric model that controls for various standard determinants of private savings. The results-based on panel data for nonoil commodity exporters of Sub-Saharan Africa for 1980-96 (a group of countries for which movements in the terms of trade have traditionally represented a key source of macroeconomic shocks)-indicate that increases in the permanent component of the terms of trade (measured using three alternative filtering techniques) indeed tend to be associated with higher rates of private savings. This paper is a product of Economic Policy and Poverty Reduction, World Bank Institute. Pierre-Richard Agénor may be contacted at pagenor@worldbank.org
Beschreibung:1 Online-Ressource (1 online resource (44 p.))
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