Working Paper
Dynamics of the trade balance and the terms of trade: the S-curve
Abstract: We provide a theoretical interpretation of two features of international data: the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in the terms of trade, but positively correlated with past movements. 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.
Keywords: Balance of trade;
Access Documents
File(s):
File format is application/pdf
https://fraser.stlouisfed.org/scribd/?item_id=494578&filepath=/docs/historical/frbclev/wp/frbclv_wp1992-11.pdf#scribd-open
Description: Full text
Bibliographic Information
Provider: Federal Reserve Bank of Cleveland
Part of Series: Working Papers (Old Series)
Publication Date: 1992
Number: 9211