Terms of Trade Shocks and Economic Recovery

25 Pages Posted: 18 Feb 2008

See all articles by Norbert Funke

Norbert Funke

International Monetary Fund (IMF) - African Department

Patrick A. Imam

International Monetary Fund (IMF)

Eleonora Granziera

Bank of Finland

Date Written: February 2008

Abstract

This paper identifies factors that contribute to a fast recovery in growth after persistent negative terms of trade shocks, using a sample of 159 countries for 1970-2006. The results suggest that policies matter. Fast recoveries are fairly robustly related to real exchange rate depreciation and improvements in government stability and the institutional environment. A timely increase in aid may also support recovery.

Keywords: Trade, Exchange rate depreciation, Economic growth

Suggested Citation

Funke, Norbert and Imam, Patrick A. and Granziera, Eleonora, Terms of Trade Shocks and Economic Recovery (February 2008). IMF Working Paper No. 08/36, Available at SSRN: https://ssrn.com/abstract=1094218

Norbert Funke (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Patrick A. Imam

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Eleonora Granziera

Bank of Finland ( email )

Snellmaninaukio
Helsinki, Helsinki 00100
Finland

HOME PAGE: http://https://sites.google.com/site/eleonoragranziera/

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