Dynamics of the trade balance and the terms of trade

Abstract We document the main cyclical features of the trade balance and the terms of trade in European Union as a whole and in the four "Cohesion Countries", in particular. S-curve describes also well the dynamic effect of terms of trade on the trade balance in these set of countries.

Oct 1, 1998 Surprisingly, the S-curve also describes the dynamic relationship between terms of trade and the trade balance for a large set of LDCs. This S-  experiences a trade deficit during this period of high output. This dynamic response pattern gives rise to countercyclical movements in the balance of trade and an  The Dynamics of the Trade Balance and the. Terms of Trade in Central and Eastern. European Countries. Alexandra Ferreira-Lopes*and Tiago Neves Sequeira  Copyright 1994 by American Economic Association. Suggested Citation. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade 

firm level using trade-specific terms in combination with uncertainty terms. Third, we emphasize the dynamic effect of trade uncertainty on capital accumulation. measure with quarterly data from Compustat, which contain balance-sheet 

They document the same properties in a two-country stochastic growth model in which trade fluctuations reflect, in large part, the dynamics of capital formation. The authors find that their Surprisingly, the S-curve also describes the dynamic relationship between terms of trade and the trade balance for a large set of LDCs. This S-curve can also be reproduced by a small-open-economy model which captures some important features of LDC economies. The S-curve is unexpectedly robust to variations in the key parameters of the model. trade balance and the terms of trade in 11 OECD countries and interpret them from the perspective of a two-country stochastic growth model. The terms of trade, in this paper, is the relative price of imports to exports and the trade balance is the ratio of net exports to output. We find that the trade We document these same properties in a two-country stochastic growth model in which trade fluctuations reflect, in large part, the dynamics of capital formation. We find that the general equilibrium perspective is essential: The relation between the trade balance and the terms of trade depends critically on the source of fluctuations. DYNAMICS OF THE TRADE BALANCE crease in domestic output, a decrease in its relative price, and a deterioration in the terms of trade. Because the productivity shock is persistent, we also see a rise in consumption and a temporary boom in in- vestment, as capital is shifted to its most productive location. In the model trade dynamics result, in large part, from fluctuations in investment. A favorable productivity shock in the domestic economy leads to an increase in domestic output, a decrease in its relative price, and a rise in the terms of trade. The increase in domestic productivity also leads to a temporary investment boom.

Terms of trade and the trade balance are key macroeconomic indicators, especially for LDCs. The latter determines the net foreign exchange receipts while the former determines their purchasing power.

Oct 1, 1998 Surprisingly, the S-curve also describes the dynamic relationship between terms of trade and the trade balance for a large set of LDCs. This S-  experiences a trade deficit during this period of high output. This dynamic response pattern gives rise to countercyclical movements in the balance of trade and an  The Dynamics of the Trade Balance and the. Terms of Trade in Central and Eastern. European Countries. Alexandra Ferreira-Lopes*and Tiago Neves Sequeira  Copyright 1994 by American Economic Association. Suggested Citation. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade  By David Backus, Patrick Kehoe and Finn Kydland; Abstract: The authors provide a theoretical interpretation of two features of international data: the  However, in their framework the terms of trade and real exchange rate are perfectly correlated. 2Raffo (2008) points out that in the BKK model that real trade  

View Homework Help - trade deficit.docx from AI 231 at Universidad Lia Pichardo 16-0755 International Trade: Making Sense of the Trade Deficit 1. TERM Spring '12; PROFESSOR Rodriguez 56 pages dynamic-aerospace- defence.pdf.

Terms of trade and the trade balance are key macroeconomic indicators, especially for LDCs. The latter determines the net foreign exchange receipts while the former determines their purchasing power. Dynamics of the Trade Balance and the Terms of Trade: The J-Curve? David K. Backus; Patrick J. Kehoe; Finn E. Kydland The American Economic Review, Vol. 84, No. 1. The authors find that their general-equilibrium perspective is essential: the relation between the trade balance and the terms of trade depends critically on the source of fluctuations. They document the same properties in a two-country stochastic growth model in which trade fluctuations reflect, in large part, the dynamics of capital formation. The authors find that their

DYNAMICS OF THE TRADE BALANCE AND THE TERMS OF TRADE: THE S-CURVE by David K. Backus, Patrick J. Kehoe, and Finn E. Kydland David K. Backus is a professor of economics at the Stern School of Business, New York University; Patrick J. Kehoe is a professor of economics at the University of Pennsylvania and a consultant at the Federal Reserve Bank of

What is the effect of shocks to the terms of trade on a country's current account ( 1994) “Dynamics of the Trade Balance and the Terms of Trade: The J-Curve? The trade balance model cannot capture adjustment dynamics of export revenue and and is a coefficient matrix for the deterministic terms, denotes the lag  KEYWORDS: structural economic dynamics; terms of trade for instance, develops a neo-Kaleckian framework characterized by surplus capacity, and lack of 

Jul 26, 2019 At the point that a country exports less than it imports, the trade surplus is negative, commonly called a trade deficit. BLS Terms of Trade Index  Fourth, the estimate of the short-run dynamics provides information regarding the This will locate the merchandise trade balance in terms of the Croatian  Aug 6, 2019 Keywords: Exchange rate, terms of trade, balance of trade, S-curve, to some indicative conclusions regarding the trade dynamics in Croatia. United Nations Comtrade Database - International Trade Statistics - Import/Export Data. the trade surplus in real terms would decline. This could have for these propositions and to analyse the dynamics of adjustment of trade flows to changes in. impulse responses to terms-of-trade shocks implied by the SVAR model. balance to an improvement in the terms of trade in 36 out of a sample of 40 developing state equilibrium conditions but play a role in the equilibrium dynamics.