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Decomposing Terms of Trade Fluctuations in Ethiopia

Author

Listed:
  • Josef L. Loening

    (World Bank, Washington)

  • Masato Higashi

    (Columbia University)

Abstract

This paper proposes a technique to decompose short-run fluctuations in the terms of trade. Using Ethiopia as an example, we decompose the commodity terms of trade into various components to measure the impact of price and volume shifts as well as export diversification. We use monthly data from the past decade, including periods during the global food and financial crises. Our findings suggest that diversification out of traditional coffee exports to other export commodities successfully mitigated a terms of trade shock. Continued export diversification will be beneficial.

Suggested Citation

  • Josef L. Loening & Masato Higashi, 2010. "Decomposing Terms of Trade Fluctuations in Ethiopia," Ibero America Institute for Econ. Research (IAI) Discussion Papers 205, Ibero-America Institute for Economic Research.
    • Handle: RePEc:got:iaidps:205
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    File URL: http://www2.vwl.wiso.uni-goettingen.de/ibero/working_paper_neu/DB205.pdf
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    Cited by:

    1. Durevall, Dick & Loening, Josef L. & Ayalew Birru, Yohannes, 2013. "Inflation dynamics and food prices in Ethiopia," Journal of Development Economics, Elsevier, vol. 104(C), pages 89-106.
    2. Magomedov, Rustam (Магомедов, Рустам) & Idrisova, Vittoria (Идрисова, Виттория), 2018. "Sectoral Indices of the Terms of Trade: Development of Methodology and Overview for Russia [Отраслевые Индексы Условий Торговли: Разработка Методики И Обзор Для России]," Working Papers 061822, Russian Presidential Academy of National Economy and Public Administration.

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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