Terms of trade and economic growth in Argentina

We define the terms of trade (of both goods and services) as an index of Price of Imports (PM) divided by the Index of Export Prices (PX). Then, following the usual approach, foreign trade is a sort of technology in which inputs of the country are exports (X) and products are imports (M). Inputs ar...

Descripción completa

Guardado en:
Detalles Bibliográficos
Autores principales: Artana, Daniel, Bour, Enrique, Bour, Juan Luis, Susmel, Nuria
Formato: Objeto de conferencia
Lenguaje:Inglés
Publicado: 2011
Materias:
Ciencias Económicas
potential gains
GDP measured
Argentina
Acceso en línea:http://sedici.unlp.edu.ar/handle/10915/170317
Aporte de:
SEDICI (UNLP) de Universidad Nacional de La Plata
id I19-R120-10915-170317
record_format dspace
spelling I19-R120-10915-1703172024-09-18T04:09:26Z http://sedici.unlp.edu.ar/handle/10915/170317 Terms of trade and economic growth in Argentina Artana, Daniel Bour, Enrique Bour, Juan Luis Susmel, Nuria 2011-11 2011 2024-09-17T18:03:02Z en Ciencias Económicas potential gains GDP measured Argentina We define the terms of trade (of both goods and services) as an index of Price of Imports (PM) divided by the Index of Export Prices (PX). Then, following the usual approach, foreign trade is a sort of technology in which inputs of the country are exports (X) and products are imports (M). Inputs are processed into products at a rate determined by the relationship between the price of exports and imports, which is the inverse of the terms of trade. From such a point of view, declining terms of trade, as experienced by Argentina in recent years, act exactly as a technological shock, since a given quantity of exports can produce a greater volume of imports. Becker and Mauro (2005) have computed for a sample of several countries that the costlier shocks correspond to the terms of trade. Easterly and others (1993) express that "shocks, especially those to terms of trade, play a large role in explaining the variance in growth," thereby contributing to its unstable character. There is some evidence that the correlation between changes in the terms of trade and real GDP is significant. Kehoe and Ruhl (2007), for example, have pointed that this number ranges between -0.30 for the U.S. and -0.73 for Mexico. It seems that the correlation with changes in the TFP has been even stronger (amounting to -0.54 and -0.71, respectively). However, the same authors have stressed that this effect is not a first order effect when the product is measured as a chained index, because if the GDP is measured using a fixed base year (as in Argentina) the effects are ambiguous, even when they may have an impact on consumption and welfare. Kehoe and Ruhl identify here a puzzle: the increase in the terms of trade is frequently accompanied by declines in productivity, so that, “If there is a causal mechanism that links shocks to the terms of trade to movements in productivity, researchers need to identify it.” In this article we will measure the magnitude of the potential gains associated with the decrease in the terms of trade in terms of productivity, and seek to find a theory compatible with the observed facts that could be used to explain a first-order effect on GDP measured, as in Argentina, according to a fixed basket of goods and services. Facultad de Ciencias Económicas Objeto de conferencia Objeto de conferencia http://creativecommons.org/licenses/by-nc-sa/4.0/ Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0) application/pdf
institution Universidad Nacional de La Plata
institution_str I-19
repository_str R-120
collection SEDICI (UNLP)
language Inglés
topic Ciencias Económicas
potential gains
GDP measured
Argentina
spellingShingle Ciencias Económicas
potential gains
GDP measured
Argentina
Artana, Daniel
Bour, Enrique
Bour, Juan Luis
Susmel, Nuria
Terms of trade and economic growth in Argentina
topic_facet Ciencias Económicas
potential gains
GDP measured
Argentina
description We define the terms of trade (of both goods and services) as an index of Price of Imports (PM) divided by the Index of Export Prices (PX). Then, following the usual approach, foreign trade is a sort of technology in which inputs of the country are exports (X) and products are imports (M). Inputs are processed into products at a rate determined by the relationship between the price of exports and imports, which is the inverse of the terms of trade. From such a point of view, declining terms of trade, as experienced by Argentina in recent years, act exactly as a technological shock, since a given quantity of exports can produce a greater volume of imports. Becker and Mauro (2005) have computed for a sample of several countries that the costlier shocks correspond to the terms of trade. Easterly and others (1993) express that "shocks, especially those to terms of trade, play a large role in explaining the variance in growth," thereby contributing to its unstable character. There is some evidence that the correlation between changes in the terms of trade and real GDP is significant. Kehoe and Ruhl (2007), for example, have pointed that this number ranges between -0.30 for the U.S. and -0.73 for Mexico. It seems that the correlation with changes in the TFP has been even stronger (amounting to -0.54 and -0.71, respectively). However, the same authors have stressed that this effect is not a first order effect when the product is measured as a chained index, because if the GDP is measured using a fixed base year (as in Argentina) the effects are ambiguous, even when they may have an impact on consumption and welfare. Kehoe and Ruhl identify here a puzzle: the increase in the terms of trade is frequently accompanied by declines in productivity, so that, “If there is a causal mechanism that links shocks to the terms of trade to movements in productivity, researchers need to identify it.” In this article we will measure the magnitude of the potential gains associated with the decrease in the terms of trade in terms of productivity, and seek to find a theory compatible with the observed facts that could be used to explain a first-order effect on GDP measured, as in Argentina, according to a fixed basket of goods and services.
format Objeto de conferencia
Objeto de conferencia
author Artana, Daniel
Bour, Enrique
Bour, Juan Luis
Susmel, Nuria
author_facet Artana, Daniel
Bour, Enrique
Bour, Juan Luis
Susmel, Nuria
author_sort Artana, Daniel
title Terms of trade and economic growth in Argentina
title_short Terms of trade and economic growth in Argentina
title_full Terms of trade and economic growth in Argentina
title_fullStr Terms of trade and economic growth in Argentina
title_full_unstemmed Terms of trade and economic growth in Argentina
title_sort terms of trade and economic growth in argentina
publishDate 2011
url http://sedici.unlp.edu.ar/handle/10915/170317
work_keys_str_mv AT artanadaniel termsoftradeandeconomicgrowthinargentina
AT bourenrique termsoftradeandeconomicgrowthinargentina
AT bourjuanluis termsoftradeandeconomicgrowthinargentina
AT susmelnuria termsoftradeandeconomicgrowthinargentina
_version_ 1824075648328531968

Ejemplares similares