Search results for " terms of trade"

showing 2 items of 2 documents

The real exchange rate in the long run: Balassa-Samuelson effects reconsidered

2017

Historical data for over hundred years and 14 countries is used to estimate the long-run effect of productivity on the real exchange rate. We find large variations in the productivity effect across four distinct monetary regimes in the sample period. Although the traditional Balassa-Samuelson model is not consistent with these results, we suggest an explanation of the results in terms of contemporary variants of the model that incorporate the terms of trade mechanism. Specifically we argue that changes in trade costs over time may affect the impact of productivity on the real exchange rate over time. We undertake simulations of the modern versions of the Balassa-Samuelson model to show that…

Economics and Econometrics050208 finance05 social sciencesjel:F31Balassa-SamuelsonSample (statistics)jel:F41Trade costTerms of tradeSettore SECS-P/06 - Economia ApplicataReal exchange rateExchange ratereal exchange rates productivity Balassa Samuelson terms of trade0502 economics and businessEconometricsEconomicsBalassa-Samuelson model050207 economicsProductivityreal exchange rates productivity Balassa-Samuelson model terms of tradeFinanceProductivityTerms of trade
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Neoclassical growth, manufacturing agglomeration, and terms of trade

2007

This paper presents an integrated view of economic growth, development traps, and economic geography. We explain why there is income convergence among some countries (neoclassical regime) and income divergence among others (poverty trap regime). Income convergence (divergence) and manufacturing industry diffusion (agglomeration) are re-enforcing each other in a cumulative process. Moreover, trade openness may trigger a catch-up process of an economy that is stuck in a \"poverty trap\". This catch-up is characterized by an increase in the investment-to-GDP ratio and an improvement of the terms of trade. A new dynamic welfare gain of trade liberalization is identified, which is likely to be l…

MacroeconomicsDivergence (linguistics)Economies of agglomerationGeography Planning and DevelopmentDevelopmentIncome convergenceTerms of tradePoverty trapjel:G10jel:F12jel:O41Economicsnaagglomeration complementarities convergence dynamic trade theory dynamic welfare gains of trade poverty trap terms of trade trade liberalization
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