IDEAS home Printed from https://ideas.repec.org/p/auu/hpaper/022.html
   My bibliography  Save this paper

Macroeconomic Consequences of Terms of Trade Episodes, Past and Present

Author

Listed:
  • Tim Atkin
  • Mark Caputo
  • Tim Robinson
  • Hao Wang

Abstract

The early 21st century saw Australia experience its largest and longest terms of trade boom. This paper places this recent boom in a long-run historical context by comparing the current episode with earlier cycles. While similarities exist across most episodes, current macroeconomic policy frameworks and settings are quite different to those of the past. This mitigated the broader macroeconomic consequences of the upswing and as the terms of trade decline may do likewise.

Suggested Citation

  • Tim Atkin & Mark Caputo & Tim Robinson & Hao Wang, 2014. "Macroeconomic Consequences of Terms of Trade Episodes, Past and Present," CEH Discussion Papers 022, Centre for Economic History, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:hpaper:022
    as

    Download full text from publisher

    File URL: https://cbe.anu.edu.au/researchpapers/CEH/WP201401.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Plumb & Christopher Kent & James Bishop, 2013. "Implications for the Australian Economy of Strong Growth in Asia," RBA Research Discussion Papers rdp2013-03, Reserve Bank of Australia.
    2. Eichengreen, Barry & Irwin, Douglas A., 1995. "Trade blocs, currency blocs and the reorientation of world trade in the 1930s," Journal of International Economics, Elsevier, vol. 38(1-2), pages 1-24, February.
    3. Ross Garnaut, 2005. "Is Macroeconomics Dead? Monetary and Fiscal Policy in Historical Context," Oxford Review of Economic Policy, Oxford University Press, vol. 21(4), pages 524-531, Winter.
    4. Withers, Glenn & Pitman, D & Whittingham, B, 1986. "Wage Adjustments and Labour Market Systems: A Cross-Country Analysis," The Economic Record, The Economic Society of Australia, vol. 62(179), pages 415-426, December.
    5. Guy Debelle & Michael Plumb, 2006. "The Evolution of Exchange Rate Policy and Capital Controls in Australia," Asian Economic Papers, MIT Press, vol. 5(2), pages 7-29, Spring/Su.
    6. McKenzie, Ian M, 1986. "Australia's Real Exchange Rate during the Twentieth Century," The Economic Record, The Economic Society of Australia, vol. 0(0), pages 69-78, Supplemen.
    7. Richard H. Snape, 1977. "Effects Of Mineral Development On The Economy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 147-156, December.
    8. H. W. Arndt, 1960. "Control Of Inflation Through Fiscal Policy: A Reappraisal," The Economic Record, The Economic Society of Australia, vol. 36(76), pages 505-516, December.
    9. Snape, Richard H., 1977. "Effects Of Mineral Development On The Economy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 1-10, December.
    10. Nigel Stapledon, 2013. "Australia's Major Terms of Trade and Commodity Shocks, 1800-2013: Sources and Impacts," CEH Discussion Papers 020, Centre for Economic History, Research School of Economics, Australian National University.
    11. Sue Kilpatrick & Bruce Felmingham, 1996. "Labour mobility in Australian industry," Applied Economics Letters, Taylor & Francis Journals, vol. 3(9), pages 577-579.
    12. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    13. Sambit Bhattacharyya & Jeffrey G. Williamson, 2011. "Commodity Price Shocks And The Australian Economy Since Federation," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 51(2), pages 150-177, July.
    14. Harding, Don & Pagan, Adrian, 2002. "Dissecting the cycle: a methodological investigation," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 365-381, March.
    15. Leon Berkelmans & Hao Wang, 2012. "Chinese Urban Residential Construction to 2040," RBA Research Discussion Papers rdp2012-04, Reserve Bank of Australia.
    16. Peter Sheehan & Robert G. Gregory, 2013. "The Resources Boom and Economic Policy in the Long Run," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(2), pages 121-139, June.
    17. Ric Battellino & Nola McMillan, 1989. "Changes in the Behaviour of Banks and Their Implications for Financial Aggregates," RBA Research Discussion Papers rdp8904, Reserve Bank of Australia.
    18. Vanessa Rayner & James Bishop, 2013. "Industry Dimensions of the Resource Boom: An Input-Output Analysis," RBA Research Discussion Papers rdp2013-02, Reserve Bank of Australia.
    19. R.G. Gregory, 1976. "Some Implications Of The Growth Of The Mineral Sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 20(2), pages 71-91, August.
    20. Ellis Connolly & David Orsmond, 2011. "The Mining Industry: From Bust to Boom," RBA Research Discussion Papers rdp2011-08, Reserve Bank of Australia.
    21. Sambit Bhattacharyya & Timothy J. Hatton, 2011. "Australian Unemployment in the Long Run, 1903–2007," The Economic Record, The Economic Society of Australia, vol. 87(277), pages 202-220, June.
    22. Ellis Connolly & Christine Lewis, 2010. "Structural Change in the Australian Economy," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 1-9, September.
    23. Leon Berkelmans & Hao Wang, 2012. "Chinese Urban Residential Construction," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 21-26, September.
    24. Garnaut, Ross, 2012. "The contemporary China resources boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 1-22.
    25. Richard N. Cooper & Robert Z. Lawrence, 1975. "The 1972-75 Commodity Boom," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(3), pages 671-724.
    26. Daniel Rees, 2013. "Terms of Trade Shocks and Incomplete Information," RBA Research Discussion Papers rdp2013-09, Reserve Bank of Australia.
    27. M.W. Butlin, 1977. "A Preliminary Annual Database 1900/01 to 1973/74," RBA Research Discussion Papers rdp7701, Reserve Bank of Australia.
    28. Ellis Connolly & David Orsmond, 2011. "The Mining Industry: From Bust to Boom," RBA Annual Conference Volume (Discontinued), in: Hugo Gerard & Jonathan Kearns (ed.),The Australian Economy in the 2000s, Reserve Bank of Australia.
    29. Christian Gillitzer & Jonathan Kearns, 2005. "Long-term Patterns in Australia’s Terms of Trade," RBA Research Discussion Papers rdp2005-01, Reserve Bank of Australia.
    30. Peter Tulip, 2014. "The Effect of the Mining Boom on the Australian Economy," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 17-22, December.
    31. Peter Lloyd, 2008. "100 Years Of Tariff Protection In Australia," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 48(2), pages 99-145, July.
    32. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    33. Kent, Christopher John, 2011. "Two depressions, one banking collapse: Lessons from Australia," Journal of Financial Stability, Elsevier, vol. 7(3), pages 126-137, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Idrisov, Georgy & Ponomarev, Yury & Sinelnikov-Murylev, Sergey, 2016. "Terms of trade and Russian economic development," Russian Journal of Economics, Elsevier, vol. 2(3), pages 279-301.
    2. Kenneth Clements & Liang Li, 2017. "Understanding resource investments," Applied Economics, Taylor & Francis Journals, vol. 49(20), pages 1950-1962, April.
    3. Kenneth W. Clements & Jiawei Si & Thomas Simpson, 2016. "Understanding New Resource Projects," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 584-600, September.
    4. Tim Atkin & Mark Caputo & Tim Robinson & Hao Wang, 2014. "Australia after the Terms of Trade Boom," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 55-62, March.
    5. Idrisov, Georgiy (Идрисов, Георгий) & Ponomarev, Yuriy (Пономарев, Юрий) & Sinelnikov-Murylev, Sergei (Синельников-Мурылев, Сергей), 2015. "Terms of trade and economic development of modern Russia [Условия Торговли И Экономическое Развитие Современной России]," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 7-37.
    6. Alexander Ballantyne & Jonathan Hambur & Ivan Roberts & Michelle Wright, 2014. "Financial Reform in Australia and China," RBA Research Discussion Papers rdp2014-10, Reserve Bank of Australia.
    7. Omar H. M. N. Bashar, 2015. "The Trickle‐down Effect of the Mining Boom in Australia: Fact or Myth?," The Economic Record, The Economic Society of Australia, vol. 91(S1), pages 94-108, June.
    8. Kenneth W. Clements & Liang Li, 2014. "Valuing Resource Investments," Economics Discussion / Working Papers 14-27, The University of Western Australia, Department of Economics.
    9. Jonathan Hambur & Lynne Cockerell & Christopher Potter & Penelope Smith & Michelle Wright, 2015. "Modelling the Australian Dollar," RBA Research Discussion Papers rdp2015-12, Reserve Bank of Australia.
    10. Manalo, Josef & Perera, Dilhan & Rees, Daniel M., 2015. "Exchange rate movements and the Australian economy," Economic Modelling, Elsevier, vol. 47(C), pages 53-62.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kenneth Clements & Liang Li, 2017. "Understanding resource investments," Applied Economics, Taylor & Francis Journals, vol. 49(20), pages 1950-1962, April.
    2. Kenneth W. Clements & Liang Li, 2014. "Valuing Resource Investments," Economics Discussion / Working Papers 14-27, The University of Western Australia, Department of Economics.
    3. Aqib Aslam & Samya Beidas-Strom & Mr. Rudolfs Bems & Oya Celasun & Zsoka Koczan, 2016. "Trading on Their Terms? Commodity Exporters in the Aftermath of the Commodity Boom," IMF Working Papers 2016/027, International Monetary Fund.
    4. Peter Tulip, 2014. "The Effect of the Mining Boom on the Australian Economy," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 17-22, December.
    5. Sambit Bhattacharyya & Jeffrey Williamson, 2013. "Distributional Impact of Commodity Price Shocks: Australia over a Century," CEH Discussion Papers 019, Centre for Economic History, Research School of Economics, Australian National University.
    6. W. Max Corden, 2012. "Dutch Disease in Australia: Policy Options for a Three-Speed Economy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 45(3), pages 290-304, September.
    7. Kenneth W. Clements & Jiawei Si & Thomas Simpson, 2016. "Understanding New Resource Projects," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 584-600, September.
    8. Mardi Dungey & Renee Fry‐Mckibbin & Vladimir Volkov, 2020. "Transmission of a Resource Boom: The Case of Australia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(3), pages 503-525, June.
    9. repec:ags:aare16:235308 is not listed on IDEAS
    10. Jonathan Hambur & Lynne Cockerell & Christopher Potter & Penelope Smith & Michelle Wright, 2015. "Modelling the Australian Dollar," RBA Research Discussion Papers rdp2015-12, Reserve Bank of Australia.
    11. Clements, Kenneth W. & Fry, Renée, 2008. "Commodity currencies and currency commodities," Resources Policy, Elsevier, vol. 33(2), pages 55-73, June.
    12. Hansen, James & Gross, Isaac, 2018. "Commodity price volatility with endogenous natural resources," European Economic Review, Elsevier, vol. 101(C), pages 157-180.
    13. Rod Tyers & Aaron Walker, 2016. "Quantifying Australia's ‘Three-Speed’ Boom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(1), pages 20-43, March.
    14. Mardi Dungey & Renee Fry-McKibbin & Verity Linehan, 2014. "Chinese resource demand and the natural resource supplier," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 167-178, January.
    15. Tim Atkin & Mark Caputo & Tim Robinson & Hao Wang, 2014. "Australia after the Terms of Trade Boom," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 55-62, March.
    16. Tim Atkin & Ellis Connolly, 2013. "Australian Exports: Global Demand and the High Exchange Rate," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 1-10, June.
    17. Marc Badia-Miró & Cristián A. Ducoing, 2014. "The long run development of Chile and the Natural Resources curse. Linkages, policy and growth, 1850-1950," UB Economics Working Papers 2014/318, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    18. Shafiullah, Muhammad & Selvanathan, Saroja & Naranpanawa, Athula, 2017. "The role of export composition in export-led growth in Australia and its regions," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 62-76.
    19. Peter Warr, 2006. "The Gregory Thesis Visits the Tropics," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 177-194, June.
    20. Gregory, Robert G., 2012. "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 1-30.

    More about this item

    Keywords

    commodity prices; terms of trade; macroeconomic policy;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:auu:hpaper:022. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/chanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.