Aggregate Spending and the Terms of Trade: Is There a Laursen-Metzler Effect?
This paper investigates the spending and current-account effects of permanent terms-of-trade shifts in a model where households maximize utility over an infinite planning period. In the framework we adopt, an economy specialized in production must experience a fall in aggregate spending and a current surplus when the terms of trade permanently deteriorate The model thus provides a counter-example to the argument of Laursen and Idetzler (1950) and Harberger (1950) that a permanent worsening in the terms of trade must produce a current-account deficit.
(This abstract was borrowed from another version of this item.)
Volume (Year): 97 (1982)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00335533|
References listed on IDEAS
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.:
- Rodriguez, Carlos Alfredo, 1976. "The Terms of Trade and the Balance of Payments in the Short Run," American Economic Review, American Economic Association, vol. 66(4), pages 710-16, September.
When requesting a correction, please mention this item's handle: RePEc:tpr:qjecon:v:97:y:1982:i:2:p:251-70. 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: (Anna Pollock-Nelson)
If references are entirely missing, you can add them using this form.