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Terms of Trade Shocks in Africa

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  • Paul Cashin
  • Catherine A. Pattillo

Abstract

This paper examines the persistence of shocks to the terms of trade, using annual data on 42 Sub-Saharan African countries between 1960-96. We find that the persistence of terms of trade shocks varies widely—for about half the countries such shocks are short-lived, while for one-third of the countries such shocks are long-lived. The countries experiencing long-lived terms of trade shocks are typically those that have large shares of petroleum imports in total imports, small shares of nonfuel commodity exports in total exports, and are highly concentrated in exportable commodities with long-lived price shocks.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 00/72.

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Length: 51
Date of creation: 01 Mar 2000
Date of revision:
Handle: RePEc:imf:imfwpa:00/72

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Keywords: Trade; Terms of trade; trade shocks; terms of trade shocks; confidence interval; time series; statistics; equation; commodity prices; correlation; cointegration; confidence intervals; import price; import prices; trade shock; standard error; logarithm; kurtosis; skewness; domestic savings; constant term; exporting countries; export prices; trade data; export price; export earnings; correlation analysis; world price; trading partners; financial statistics; exchange rate regime; descriptive statistics; autocorrelation; sample sizes; probability; export performance; normal distribution; agricultural commodities; sample size; external shocks; covariance; correlations; oil exporters; world market; international trade; dummy variable; regression equation; trade terms; trade performance; partner country; forecasting; commodity trade; statistical inference; export value; trade figures; statistic; non-oil commodity; random walk; food exports; world demand; open economy; estimation method; price of imports; political economy; outliers; world markets; estimation procedure; random variable; import side; central tendency; external financing; exchange rate regimes; trade focuses; random walks; samples; statistical significance; imported goods; oil prices; market microstructure; terms-of-trade shocks;

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Citations

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Cited by:
  1. Jean-Louis Combes & Tahsin Saadi-Sedik, 2006. "How does trade openness influence budget deficits in developing countries?," Journal of Development Studies, Taylor & Francis Journals, vol. 42(8), pages 1401-1416.
  2. Arango, Santiago & Moxnes, Erling, 2012. "Commodity cycles, a function of market complexity? Extending the cobweb experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 321-334.
  3. Tsangarides, Charalambos G. & Qureshi, Mahvash Saeed, 2008. "Monetary Union Membership in West Africa: A Cluster Analysis," World Development, Elsevier, vol. 36(7), pages 1261-1279, July.
  4. Zafar, Ali, 2004. "What happens when a country does not adjust to terms of trade shocks? the case of oil-rich Gabon," Policy Research Working Paper Series 3403, The World Bank.
  5. R. Gaston Gelos, Ratna Sahay and Guido Sandleris, 2008. "Sovereign Borrowing by Developing Countries: What Determines Market Access?," Business School Working Papers 2008-02, Universidad Torcuato Di Tella.
  6. Arvind Subramanian & Devesh Roy, 2001. "Who Can Explain the Mauritian Miracle," IMF Working Papers 01/116, International Monetary Fund.
  7. Issouf Samaké, 2008. "Investment and Growth Dynamics," IMF Working Papers 08/120, International Monetary Fund.
  8. Willene Johnson, 2006. "Policy responses to economic vulnerability," CDP Background Papers 009, United Nations, Department of Economics and Social Affairs.
  9. World Bank, 2003. "Nigeria - Policy Options for Growth and Stability : Volume 1. Main Report," World Bank Other Operational Studies 14388, The World Bank.
  10. Paul Cashin & Catherine Pattillo, 2006. "African terms of trade and the commodity terms of trade: close cousins or distant relatives?," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 845-859.
  11. Paul R. Masson & Xavier Debrun & Catherine A. Pattillo, 2002. "Monetary Union in West Africa," IMF Working Papers 02/226, International Monetary Fund.
  12. Rune Jansen Hagen, 2002. "Marginalisation in the Context of Globalisation: Why Is Africa so Poor?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 28, pages 147-179.
  13. SENBETA, Sisay Regassa, 2011. "A small open economy new Keynesian DSGE model for a foreign exchange constrained economy," Working Papers 2011004, University of Antwerp, Faculty of Applied Economics.
  14. Quentin Wodon, 2007. "Growth and Poverty Reduction : Case Studies from West Africa," World Bank Publications, The World Bank, number 6875, October.
  15. Hazel Selvon & Tracy Polius & Oral Williams, 2001. "Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone," IMF Working Papers 01/104, International Monetary Fund.
  16. Addison, Douglas & Wodon, Quentin, 2007. "Macroeconomic Volatility, Private Investment, Growth, and Poverty in Nigeria," MPRA Paper 11113, University Library of Munich, Germany.
  17. CARDI, Oliver & BERTINELLI, Luisito, 2004. "A formal model of krugman’s intuition on the J-curve," CORE Discussion Papers 2004043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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