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Dynamics of the Trade Balance and the Terms of Trade: The S-Curve / David Backus, Patrick J. Kehoe, Finn E. Kydland.
- Format:
- Book
- Author/Creator:
- Backus, David.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w4242.
- NBER working paper series no. w4242
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Dynamics of the Trade Balance and the Terms of Trade
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1992.
- Summary:
- 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.
- Notes:
- Print version record
- December 1992.
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