The Response of the Current Account to Terms of Trade Shocks: Persistence Matters
Is the relationship between the current account balance and the terms of trade affected by the persistence of terms of trade shocks? In intertemporal models of the current account that incorporate a consumption-smoothing and an investment response to shocks, the effect of the terms of trade on exter...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
International Monetary Fund
2003
|
| Schriftenreihe: | IMF Working Papers
Working Paper No. 03/143 |
| Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 Volltext |
| Zusammenfassung: | Is the relationship between the current account balance and the terms of trade affected by the persistence of terms of trade shocks? In intertemporal models of the current account that incorporate a consumption-smoothing and an investment response to shocks, the effect of the terms of trade on external balances is predicted to be dependent on the duration of terms of trade shocks. Using a median-unbiased estimator, an unbiased model-selection rule, and terms of trade data for 128 countries over the period 1960-99 we identify two groups of countries-those that typically experience temporary terms of trade shocks and those that typically experience permanent terms of trade shocks. The results from panel-data regressions of the two groups of countries support the theoretical predictions of the intertemporal approach to the current account. We find that the greater (lesser) the persistence of the terms of trade shock, the more (less) the investment effect dominates the consumption-smoothing effect on saving, so that the current account balance moves in the opposite (same) direction as that of the shock |
| Beschreibung: | 1 Online-Ressource (48 p) |
| ISBN: | 1451856369 9781451856361 |
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| index_date | 2024-07-03T20:13:25Z |
| indexdate | 2024-07-10T09:35:33Z |
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| record_format | marc |
| series2 | IMF Working Papers |
| spelling | Cashin, Paul Verfasser aut The Response of the Current Account to Terms of Trade Shocks Persistence Matters Cashin, Paul Washington, D.C International Monetary Fund 2003 1 Online-Ressource (48 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 03/143 Is the relationship between the current account balance and the terms of trade affected by the persistence of terms of trade shocks? In intertemporal models of the current account that incorporate a consumption-smoothing and an investment response to shocks, the effect of the terms of trade on external balances is predicted to be dependent on the duration of terms of trade shocks. Using a median-unbiased estimator, an unbiased model-selection rule, and terms of trade data for 128 countries over the period 1960-99 we identify two groups of countries-those that typically experience temporary terms of trade shocks and those that typically experience permanent terms of trade shocks. The results from panel-data regressions of the two groups of countries support the theoretical predictions of the intertemporal approach to the current account. We find that the greater (lesser) the persistence of the terms of trade shock, the more (less) the investment effect dominates the consumption-smoothing effect on saving, so that the current account balance moves in the opposite (same) direction as that of the shock Online-Ausg Kent, Christopher J. Sonstige oth http://elibrary.imf.org/view/IMF001/07253-9781451856361/07253-9781451856361/07253-9781451856361.xml Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Cashin, Paul The Response of the Current Account to Terms of Trade Shocks Persistence Matters |
| title | The Response of the Current Account to Terms of Trade Shocks Persistence Matters |
| title_auth | The Response of the Current Account to Terms of Trade Shocks Persistence Matters |
| title_exact_search | The Response of the Current Account to Terms of Trade Shocks Persistence Matters |
| title_exact_search_txtP | The Response of the Current Account to Terms of Trade Shocks Persistence Matters |
| title_full | The Response of the Current Account to Terms of Trade Shocks Persistence Matters Cashin, Paul |
| title_fullStr | The Response of the Current Account to Terms of Trade Shocks Persistence Matters Cashin, Paul |
| title_full_unstemmed | The Response of the Current Account to Terms of Trade Shocks Persistence Matters Cashin, Paul |
| title_short | The Response of the Current Account to Terms of Trade Shocks |
| title_sort | the response of the current account to terms of trade shocks persistence matters |
| title_sub | Persistence Matters |
| url | http://elibrary.imf.org/view/IMF001/07253-9781451856361/07253-9781451856361/07253-9781451856361.xml |
| work_keys_str_mv | AT cashinpaul theresponseofthecurrentaccounttotermsoftradeshockspersistencematters AT kentchristopherj theresponseofthecurrentaccounttotermsoftradeshockspersistencematters |