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

Revista Prospectiva e Planeamento, No. 7, pp. 187-230, 2001

44 Pages Posted: 7 Jun 2004

See all articles by Tiago Sequeira

Tiago Sequeira

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

Alexandra Ferreira Lopes

Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE)

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

Sequeira, Tiago and Lopes, Alexandra Ferreira, The Dynamics of Trade Balance and the Terms of Trade: S Curve in Europe?. Revista Prospectiva e Planeamento, No. 7, pp. 187-230, 2001, Available at SSRN: https://ssrn.com/abstract=554204

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

Alexandra Ferreira Lopes

Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE) ( email )

Complexo Indeg/Iscte
Av. Professor Anibal Bettencourt
Lisboa, 1600-189
Portugal

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