Coping with terms-of-trade shocks in developing countries

RePEc Short ID: pti5
ORCID iD: 0000-0002-5939-2155

Broda, Christian; Tille, Cédric

Journal Article

Coping with terms-of-trade shocks in developing countries

Abstract: Sharp swings in a developing country's terms of trade, the price of its exports relative to the price of its imports, can seriously disrupt output growth. An analysis of the effects of a decline in export prices in seventy-five developing economies suggests that countries with a flexible exchange rate will experience a much milder contraction in output than their counterparts with fixed exchange rate regimes.

Keywords: International trade; Exports; Imports; Developing countries; Prices; Foreign exchange rates; Gross domestic product;