Private Saving and Terms of Trade Shocks
AbstractThis paper examines the relationship between temporary terms of trade shocks and household saving in developing countries. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock, depending on the values of the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between traded and nontraded goods. Empirical estimates of these two parameters are obtained using data from a sample of 13 developing countries, and then used to draw implications for the response of private saving to transitory terms of trade shocks.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 91/100.
Date of creation: 01 Oct 1991
Date of revision:
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Other versions of this item:
- F30 - International Economics - - International Finance - - - General
- F10 - International Economics - - Trade - - - General
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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