Real GDP and the Purchasing Power of Provincial Output
AbstractThis paper examines the impact of import and export price changes on economic welfare in Canada, and in each of the provinces. It examines how terms of trade shifts and fluctuations in the ratio of traded to non-traded goods prices affect the purchasing power of domestic production. Terms of trade shifts are shown to have a larger impact in the short-run. Moreover, the paper shows that failing to account for terms of trade shifts, when analysing macroeconomic data, can lead to misinterpretations about the sources of growth or decline in consumption, investment and imports. The magnitude and direction of terms of trade fluctuations, and their impacts, vary by province and over time. Changes in commodity prices are shown to have important effects. The effect of terms of trade shifts is largest in Alberta and Newfoundland and Labrador, while Manitoba is relatively unaffected.
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Bibliographic InfoPaper provided by Statistics Canada, Analytical Studies Branch in its series Economic Analysis (EA) Research Paper Series with number 2007046e.
Date of creation: 24 Jul 2007
Date of revision:
Economic accounts; Gross domestic product; Income and expenditure accounts; International trade;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-08 (All new papers)
- NEP-INT-2007-08-08 (International Trade)
- NEP-MAC-2007-08-08 (Macroeconomics)
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.:
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"Adjusting Output and Productivity Indexes for Changes in the Terms of Trade,"
NBER Working Papers
1564, National Bureau of Economic Research, Inc.
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- Macdonald, Ryan, 2007. "Not Dutch Disease, It's China Syndrome," Insights on the Canadian Economy 2007017e, Statistics Canada, Economic Analysis.
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