Coping with Terms-of-Trade Shocks in Developing Countries

7 Pages Posted: 11 Mar 2005

See all articles by Christian M. Broda

Christian M. Broda

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Cédric Tille

Graduate Institute of International and Development Studies (HEI)

Abstract

Sharp swings in a developing country's terms of trade - the price of its exports relative to the price of its imports - can seriously disrupt output growth. An analysis of the effects of a decline in export prices in seventy-five developing economies suggests that countries with a flexible exchange rate will experience a much milder contraction in output than their counterparts with fixed exchange rate regimes.

Keywords: terms of trade, exchange rate regime

JEL Classification: F31, F41

Suggested Citation

Broda, Christian M. and Tille, Cedric, Coping with Terms-of-Trade Shocks in Developing Countries. Current Issues in Economics and Finance, Vol. 9, No. 11, November 2003. Available at SSRN: https://ssrn.com/abstract=683288

Christian M. Broda (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Cedric Tille

Graduate Institute of International and Development Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

HOME PAGE: http://sites.google.com/site/cedrictilleheid/home

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