Transitory Terms-of-Trade Shocks and the Current Account: The Case of Constant Time Preference

Obstfeld, Maurice

doi:10.3386/w0834

Cited by 7 publications

(4 citation statements)

References 5 publications

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“…Bu kanal üzerinde dıĢ ticaret hadlerinin dıĢ denge ve bu yolla tasarruflar üzerindeki etkisi analiz edilmiĢtir. Bu etkiler pozitif veya negatif olabilmektedir (Sachs 1981;Obstfeld 1982a;Gavin, vd. 1990;Ostry ve Reinhar 1992).…”

Section: Li̇teratür Taramasiunclassified

The Relationship of Terms of Trade and Economic Growth: The Turkish Case

Eki̇nci̇¹,

Tüzün²,

Kahyaoğlu³

2015

OJEMS

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ÖZBu çalıĢmanın amacı dıĢ ticaret hadlerinin ekonomik büyüme üzerindeki etkisini analiz etmektir. Bu çalıĢmanın teorik temeli Harberger-Laursen-Metzler (HLM) ve Obstfeld-Razin-Svensson (ORS) etkisi yaklaĢımlarına dayanmaktadır. HLM yaklaĢımı dıĢ ticaret hadlerindeki bir kötüleĢmenin ülkenin dıĢ ticaret açıkları üzerinde olumlu bir etkiye yol açacağını belirtmekte, bu olumlu geliĢmenin ülkenin ekonomik büyümesi üzerinde yaratacağı etkiye bağlı olarak da dıĢ ticaret açıklarında bir artıĢa neden olacağı yönünde bilgi sunmaktadır. Bu yaklaĢım literatürde S Eğrisi olarak bilinmektedir. ORS yaklaĢımı ise dıĢ ticaret hadlerindeki bir Ģokun devamlılığı yönündeki algıya bağlı olarak dıĢ ticaret hadlerindeki geliĢmelerin ekonomik büyüme üzerinde etkili olacağını belirtmektedir.Bu kapsamda dıĢ ticaret hadlerinin ekonomik büyüme üzerindeki pozitif ve negatif etkisi Markov DeğiĢim Tekniği yaklaĢımıyla incelenmektedir. Analizde ekonomik büyümenin göstergesi olarak imalat sanayi üretim endeksi, rejim veya geçiĢ değiĢkeni olarak da dıĢ ticaret hadleri kullanılmıĢtır. ÇalıĢmanın bulgularına göre dıĢa açık ekonomik büyüme stratejisi dıĢ ticaret hadlerinin ülke lehine olmasına bağlıdır. The Relationship of Terms of Trade and Economic Growth: The Turkish Case ABSTRACTThis paper aims to analyze the influence of foreign trade sizes on economic growth. Theoretical framework of this study rests on Harberger-Laursen-Metzler (HLM) and Obstfeld-Razin-Svensson (ORS) effect approaches. Approach of HLM indicates that any setback in foreign trade size of a country causes a favorable effect on foreign trade deficit of that country. In accordance with improved growth rates generated by this positive effect HLM approach also provides information towards an increase of foreign trade deficits. This approach is known as S-Curve in academic literature. ORS approach on the other hand, opposes that improvements in foreign trade sizes become effective on economic growth with perceptions related with continuity of shock happening to foreign trade sizes.With this context, positive and negative effects of foreign trade sizes on economic growth are examined via Markov Variation technique. In the analysis, manufacturing industry production index is taken as indicator of economic growth whereas foreign trade sizes are taken as regimen or transitional parameter. With findings of this study, outward-oriented growth strategy depends on the terms of trade are in favor of the country.

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Section: Li̇teratür Taramasiunclassified

The Relationship of Terms of Trade and Economic Growth: The Turkish Case

Eki̇nci̇¹,

Tüzün²,

Kahyaoğlu³

2015

OJEMS

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“…One such class in thar of additively sepa rable utility functions. Sachs (1981c) and Obstfeld (1981) also adopt this formulation.…”

Section: 3mentioning

confidence: 99%

A two-sector intertemporal optimizing model of capital accumulation and external indebtedness

Nunes¹

1986

Brazilian Review of Econometrics

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An intertemporal optimizing model for a small open economy is developed to study the dynamic interaction between capital accumulation and external indebtedness and the steady-state relation between the size of the capital stock and the level of external indebtedness. The analysis shows that in a context of growth, persistent current-account imbalances may result as the outcome of optimal behavior on the part of intertemporal maximizing agents. However, it is shown that by incurring external debt to partially finance its gro wth effort, the economy places itself on a constrained growth path that ultimately affects the optimal level of the steady-state capital stock.

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“…Using an intertemporal optimization framework with infinitely-lived households, Obstfeld (1982a) revisited the issue of terms of trade shocks and found that the HarbergerLaursen-Metzler effect failed to hold when there was a permanent deterioration in terms of trade. However, Obstfeld (1982b;1983) showed that a temporary worsening of terms of trade led to a current account deficit, but that when terms of trade reverted to their original level, the current account would move into surplus and ultimately back to its initial steady-state level. Svesson and Razin (1983) adopted a two-period, two-good (importable and exportable goods) framework to reexamine Obstfeld's propositions and found that there were deteriorations in the current account and savings as a result of temporary deterioration in terms of trade, but that this might go either way as a result of any permanent deterioration.…”

Section: Introductionmentioning

confidence: 99%

Current Account, Capital Formation and Terms of Trade Shocks: a Revisit of the Harberger-Laursen-Metzler Effect

Chen

Hsu

2006

J. Econ.

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This paper extends the Blanchard model of a closed-economy to a three-good (exportable, importable and non-tradable goods) open-economy model with capital accumulation and uncertain lifetimes to study the impacts of terms of trade shocks on the current account. The simulation results show that a model with uncertain lifetimes is more appropriate to describe a small open economy like Taiwan at the steady-state equilibrium than a model with infinite lifetimes. We find that the Harberger-Laursen-Metzler effect is discernible for temporary or permanent terms of trade shocks. Furthermore, the steady state is a saddle point and the speed of convergence of capital and consumption is quite low.

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Transitory Terms-of-Trade Shocks and the Current Account: The Case of Constant Time Preference

Cited by 7 publications

References 5 publications

The Relationship of Terms of Trade and Economic Growth: The Turkish Case

The Relationship of Terms of Trade and Economic Growth: The Turkish Case

A two-sector intertemporal optimizing model of capital accumulation and external indebtedness

Current Account, Capital Formation and Terms of Trade Shocks: a Revisit of the Harberger-Laursen-Metzler Effect

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