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The Harberger-Laursen-Metzler Effect. Theory and Practice in Poland

  • Piotr Misztal

    ()

    (Radom Technical University, Poland)

The aim of the article is analyses of the Harberger-Laursen-Metzler effect in light of the theory and in practice, with particular reference to this effect in Poland in the period 1995-2009. The results of research carried out by means of the vector autoregression model (VAR) revealed that temporary improvement in terms of trade in Poland led to the current account improvement, and permanent improvement in terms of trade contributed to the current account deterioration. Thus it was confirmed prevalence of the Harberger-Laursen-Metzler effect in Poland. Additionally, results of investigation confirmed relatively greater impact of temporary changes in terms of trade on the current account than in the case of permanent changes in terms of trade. Analogous interdependence was revealed witch reference to clarification of the current account variability. Temporary changes in terms of trade accounted for in much more extent the current account variability in relation to permanent changes in terms of trade.

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Article provided by Department of International Business and Economics from the Academy of Economic Studies Bucharest in its journal Romanian Economic Journal.

Volume (Year): 13 (2010)
Issue (Month): 38 (December)
Pages: 129-146

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Handle: RePEc:rej:journl:v:13:y:2010:i:38:p:129-146
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  5. Persson, Torsten & Svensson, Lars E O, 1985. "Current Account Dynamics and the Terms of Trade: Harberger-Laursen-Metzler Two Generations Later," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 43-65, February.
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  8. Sen, Partha & Turnovsky, Stephen J., 1989. "Deterioration of the terms of trade and capital accumulation: A re-examination of the Laursen-Metzler effect," Journal of International Economics, Elsevier, vol. 26(3-4), pages 227-250, May.
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