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 University Library of Munich, Germany in its series MPRA Paper with number 13716.
Date of creation: Oct 1991
Date of revision:
Publication status: Published in IMF Staff Papers 39.3(1992): pp. 495-517
traded and nontraded goods consumption real interest rates current account;
Find related papers by JEL classification:
- F30 - International Economics - - International Finance - - - General
- F10 - International Economics - - Trade - - - General
- E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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