Effects of Terms of Trade and its Volatility on Economic Growth: A Cross Country Empirical Investigation
AbstractThis study examines the effects of terms of trade and its volatility on economic growth for a sample of 94 developed and developing countries, using five year average annual data from 2004 to 2008. The cross country ordinary least square estimation results indicate significant positive effect of terms of trade on economic growth. Furthermore, volatility of terms of trade has significant positive effect on economic growth. To test the robustness of initial results, sensitivity analysis has been performed using different additional variables, sample size and various proxies of volatility variable. The initial results were found robust despite the inclusion of various variables in the basic model and use of various proxies for volatility of terms of trade.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Transition Studies Review.
Volume (Year): 18 (2011)
Issue (Month): 2 (December)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=112913
Other versions of this item:
- Syed tehseen, jawaid & Abdul, waheed, 2011. "Effects of Terms of Trade and its Volatility on Economic Growth: A Cross Country Empirical Investigation," MPRA Paper 32694, University Library of Munich, Germany.
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Otto, G., 2003. "Terms of trade shocks and the balance of trade: there is a Harberger-Laursen-Metzler effect," Journal of International Money and Finance, Elsevier, vol. 22(2), pages 155-184, April.
- Paul Cashin & C. McDermott, 2002. "Terms of Trade Shocks and the Current Account: Evidence from Five Industrial Countries," Open Economies Review, Springer, vol. 13(3), pages 219-235, July.
- Edwards Jeffrey A, 2007. "Dynamics of the Cross-Country Growth/Volatility Relationship," Global Economy Journal, De Gruyter, vol. 7(2), pages 1-20, June.
- Arize, A. C., 1996. "Cointegration test of a long-run relation between the trade balance and the terms of trade in sixteen countries," The North American Journal of Economics and Finance, Elsevier, vol. 7(2), pages 203-215.
- Hock Wong, 2010. "Terms of trade and economic growth in Japan and Korea: an empirical analysis," Empirical Economics, Springer, vol. 38(1), pages 139-158, February.
- Shigeyuki HAMORI, 2008. "Trade Balances and the Terms of Trade in G-7 Countries: Penal Cointegration Approach," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(2), pages 13-22.
- Paul Cashin & C. John McDermott, 2001.
"The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability,"
IMF Working Papers
01/68, International Monetary Fund.
- Paul Cashin & C. John McCDermott, 2002. "The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability," IMF Staff Papers, Palgrave Macmillan, vol. 49(2), pages 2.
- Goel, Rajeev K. & Ram, Rati, 2001. "Irreversibility of R&D investment and the adverse effect of uncertainty: Evidence from the OECD countries," Economics Letters, Elsevier, vol. 71(2), pages 287-291, May.
- Bouakez, Hafedh & Kano, Takashi, 2008. "Terms of trade and current account fluctuations: The Harberger-Laursen-Metzler effect revisited," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 260-281, March.
- Robert J. Barro, 1998.
"Determinants of Economic Growth: A Cross-Country Empirical Study,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262522543, June.
- Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc.
- Lutz, Matthias G, 1999. "A General Test of the Prebisch-Singer Hypothesis," Review of Development Economics, Wiley Blackwell, vol. 3(1), pages 44-57, February.
- Christopher Blattman & Jason Hwang & Jeffrey G. Williamson, 2003. "The Terms of Trade and Economic Growth in the Periphery 1870-1938," NBER Working Papers 9940, National Bureau of Economic Research, Inc.
- Michael Stastny & Martin Zagler, 2007. "Empirical Evidence on Growth and Volatility," RSCAS Working Papers 2007/22, European University Institute.
- Levine, Ross & Renelt, David, 1991.
"A sensitivity analysis of cross-country growth regressions,"
Policy Research Working Paper Series
609, The World Bank.
- Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
- Mendoza, Enrique G., 1997. "Terms-of-trade uncertainty and economic growth," Journal of Development Economics, Elsevier, vol. 54(2), pages 323-356, December.
- Piotr Misztal, 2010. "The Harberger-Laursen-Metzler Effect. Theory and Practice in Poland," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 13(38), pages 129-146, December.
- Bleaney, Michael & Greenaway, David, 2001. "The impact of terms of trade and real exchange rate volatility on investment and growth in sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 65(2), pages 491-500, August.
- Yanikkaya, Halit, 2003. "Trade openness and economic growth: a cross-country empirical investigation," Journal of Development Economics, Elsevier, vol. 72(1), pages 57-89, October.
- Jawaid, Syed Tehseen & Raza, Syed Ali, 2012.
"Workers’ remittances and economic growth in China and Korea: an empirical analysis,"
39003, University Library of Munich, Germany.
- Syed Tehseen Jawaid & Syed Ali Raza, 2012. "Workers' remittances and economic growth in China and Korea: an empirical analysis," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 5(3), pages 185-193, December.
- Jawaid, Syed Tehseen & Raza, Syed Ali, 2012. "Foreign Direct Investment, Growth and Convergence Hypothesis: A Cross Country Analysis," MPRA Paper 39000, University Library of Munich, Germany.
- Jawaid, Syed Tehseen & Raza, Syed Ali, 2012. "Remittances, Growth and Convergence: Evidence from Developed and Developing Countries," MPRA Paper 39002, University Library of Munich, Germany.
- Jawaid, Syed Tehseen & Raza, Syed Ali, 2012. "Workers’ Remittances and Economic Growth in South Asia," MPRA Paper 39001, University Library of Munich, Germany.
- Jawaid, Syed Tehseen & Raza, Syed Ali, 2012. "Effects of terms of trade and its volatility on economic growth in India," MPRA Paper 38998, University Library of Munich, Germany.
- Awel, Ahmed Mohammed, 2012. "Terms of Trade Volatility and Economic Growth in Sub-Saharan Africa," MPRA Paper 45453, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.