Does Any Long-Run Relation Exist Between the Terms of Trade and the Trade Balance?
In this paper we use the Johansen and Juselius cointegration technique t examine the long-run convergenCe between the trade balance and the terms o trade, using quarterly data from Sweden. The results show that the trade balance and the terms of trade are cointegrated in the long run and the trade balance is positively correlated with the terms of trade. This implies that productivity gap between the domestic economy and the rest of the world, implying technological shock to the domestic economy, affects the trade balance. The policy implication of our findings is that the use of the origina1 Marsha Lerner condition is no longer sufficient as a justification for currency depreciation and the condition may be excessively conservative when the pricing to market phenomenon is important in explaining the evolution of the external trade balance.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 54 (2001)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: |
Phone: +39 010 27041
Fax: +39 010 2704222
Web page: http://www.ge.camcom.it/IT/Tool/Modulistica
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0216. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Angela Procopio)
If references are entirely missing, you can add them using this form.