The Dynamics of Trade Balance and Terms of Trade: 'S' Curve in Europe?

42 Pages Posted: 29 Apr 2002

See all articles by Alda Rito

Alda Rito

Economic Research and Forecasting Department (DGEP)

Alexandra Ferreira

Government of Portugal - Department of Prospective and Planning (DPP)

Tiago Sequeira

University of the Interior of Beira - Department of Management and Economics; Universidade Nova de Lisboa (UNL) - Economics Department

Abstract

We document the main cyclical features of the trade balance and the terms of trade in European Union as a whole and in the four "Cohesion Countries", in particular. S-curve describes also well the dynamic effect of terms of trade on the trade balance in these set of countries. We use the Backus, Kehoe and Kydland (1994) model to replicate the empirical data. We show that only one variable in the model is robust to cross-country differences: the trade balance.

Keywords: Real Business Cycles, Trade Balance, Terms of Trade, S-curve

JEL Classification: E32, E37

Suggested Citation

Rito, Alda and Ferreira, Alexandra and Sequeira, Tiago, The Dynamics of Trade Balance and Terms of Trade: 'S' Curve in Europe?. Available at SSRN: https://ssrn.com/abstract=309588 or http://dx.doi.org/10.2139/ssrn.309588

Alda Rito

Economic Research and Forecasting Department (DGEP) ( email )

Rua de Alfandega, 5-2
1100-016 Lisbon
Portugal

Alexandra Ferreira

Government of Portugal - Department of Prospective and Planning (DPP) ( email )

Lisbon
Portugal

Tiago Sequeira (Contact Author)

University of the Interior of Beira - Department of Management and Economics ( email )

Estrada do Sineiro
6200-209 Covilha
Portugal

Universidade Nova de Lisboa (UNL) - Economics Department ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

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