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Author: Mr.Jonathan David Ostry
Publisher: International Monetary Fund
ISBN: 1451852312
Category : Business & Economics
Languages : en
Pages : 26
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Book Description
This paper examines the relationship between temporary terms of trade shocks and household saving in developing countries. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock, depending on the values of the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between traded and nontraded goods. Empirical estimates of these two parameters are obtained using data from a sample of 13 developing countries, and then used to draw implications for the response of private saving to transitory terms of trade shocks.
Author: Mr.Jonathan David Ostry
Publisher: International Monetary Fund
ISBN: 1451852312
Category : Business & Economics
Languages : en
Pages : 26
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Book Description
This paper examines the relationship between temporary terms of trade shocks and household saving in developing countries. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock, depending on the values of the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between traded and nontraded goods. Empirical estimates of these two parameters are obtained using data from a sample of 13 developing countries, and then used to draw implications for the response of private saving to transitory terms of trade shocks.
Author: Jonathan D. Ostry
Publisher:
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
This paper examines the relationship between temporary terms of trade shocks and household saving in developing countries. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock, depending on the values of the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between traded and nontraded goods. Empirical estimates of these two parameters are obtained using data from a sample of 13 developing countries, and then used to draw implications for the response of private saving to transitory terms of trade shocks.
Author: Mr.Paul Cashin
Publisher: International Monetary Fund
ISBN: 145197504X
Category : Business & Economics
Languages : en
Pages : 41
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Book Description
This paper examines the relationship between terms of trade shocks, private saving, and the current account position. The relationship between these variables is theoretically ambiguous: an adverse transitory terms of trade shock can either induce a deterioration or an improvement in the current account, depending on whether the resulting income effects are greater or less than the resulting substitution effects. The substitution effects involve both intertemporally substituting consumption and intratemporally substituting consumption between importables and nontradables. The relative strength of these substitution effects is estimated using data for five OECD countries during 1970/95; both are found to exert large and significant effects on the current account balance.
Author: Pierre-Richard Agénor
Publisher: World Bank Publications
ISBN: 2705354794
Category : Ahorro
Languages : en
Pages : 44
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Book Description
When households face the possibility of borrowing constraints in bad times, favorable movements in the permanent component of the terms of trade may lead to higher rates of private savings.
Author: Abdur R. Chowdhury
Publisher:
ISBN:
Category :
Languages : en
Pages : 39
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Book Description
Author: Abdur R. Chowdhury
Publisher:
ISBN:
Category :
Languages : en
Pages : 35
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Book Description
Author: Paul Anthony Cashin
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
This paper examines the relationship between terms of trade shocks, private saving, and the current account position. The relationship between these variables is theoretically ambiguous: an adverse transitory terms of trade shock can either induce a deterioration or an improvement in the current account, depending on whether the resulting income effects are greater or less than the resulting substitution effects. The substitution effects involve both intertemporally substituting consumption and intratemporally substituting consumption between importables and nontradables. The relative strength of these substitution effects is estimated using data for five OECD countries during 1970/95; both are found to exert large and significant effects on the current account balance.
Author: Abdur R. Chowdhury
Publisher:
ISBN:
Category : Saving and investment
Languages : fi
Pages : 31
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Book Description
Author: Abdur Chowdhury
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines whether terms of trade shocks have an asymmetric effect on private savings in transition economies. A simple three-period framework is developed to show that, in the presence of binding credit constraints in bad states of nature, savings rates can be sensitive to favorable movements in the permanent component of the terms of trade. This result contrasts with the prediction of the conventional consumption-smoothing model. Empirical analysis with a dynamic panel model further confirms that while favorable movements in the permanent component of the terms of trade have an asymmetric effect on private savings, the magnitude of the effect is relatively small. The results are robust for alternative estimators, determinants, and country groupings.
Author: Pierre-Richard Agenor
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
When households face the possibility of borrowing constraints in bad times, favorable movements in the permanent component of the terms of trade may lead to higher rates of private savings. Agenor and Aizenman examine the extent to which permanent terms-of-trade shocks have an asymmetric effect on private savings.Using a simple three-period model, they show that if households expect to face binding constraints on borrowing in bad states of nature (when the economy is in a long trough rather than a sharp peak), savings rates will respond asymmetrically to favorable movements in the permanent component of the terms of trade-in contrast with the predictions of conventional consumption-smoothing models.They test for asymmetric effects of terms-of-trade disturbances using an econometric model that controls for various standard determinants of private savings. The results - based on panel data for nonoil commodity exporters of Sub-Saharan Africa for 1980-96 (a group of countries for which movements in the terms of trade have traditionally represented a key source of macroeconomic shocks) - indicate that increases in the permanent component of the terms of trade (measured using three alternative filtering techniques) indeed tend to be associated with higher rates of private savings.This paper is a product of Economic Policy and Poverty Reduction, World Bank Institute.
