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Terms of Trade Shocks and Economic Recovery

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  • Patrick A. Imam
  • Eleonara Granziera
  • Norbert Funke

Abstract

This paper identifies factors that contribute to a fast recovery in growth after persistent negative terms of trade shocks, using a sample of 159 countries for 1970-2006. The results suggest that policies matter. Fast recoveries are fairly robustly related to real exchange rate depreciation and improvements in government stability and the institutional environment. A timely increase in aid may also support recovery.

Suggested Citation

  • Patrick A. Imam & Eleonara Granziera & Norbert Funke, 2008. "Terms of Trade Shocks and Economic Recovery," IMF Working Papers 08/36, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:08/36
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    Cited by:

    1. Antonio David & Fabiano Rodrigues Rodrigues Bastos & Marshall Mills, 2011. "Post-Conflict Recovery; Institutions, Aid, or Luck?," IMF Working Papers 11/149, International Monetary Fund.
    2. Fanelli, José María & Jiménez, Juan Pablo, 2009. "Crisis, volatility and fiscal policy in Latin America," Documentos de Proyectos 4167, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Gómez Sabaini, Juan Carlos & Jiménez, Juan Pablo, 2009. "El papel de la política tributaria frente a la crisis: límites y posibilidades," Documentos de Proyectos 4166, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Peter H. Bent, 2018. "Recovery from Financial Crises in Peripheral Economies, 1870-1913," CEH Discussion Papers 07, Centre for Economic History, Research School of Economics, Australian National University.
    5. Patrick A. Imam, 2008. "Rapid Current Account Adjustments; Are Microstates Different?," IMF Working Papers 08/233, International Monetary Fund.
    6. Alice N. Sindzingre, 2015. "Whatever Inconsistencies and Effects? Explaining the Resilience of the Policy Reforms Applied to Developing Countries," Forum for Social Economics, Taylor & Francis Journals, vol. 44(2), pages 159-178, August.
    7. -, 2009. "Macroeconomic policies in times of crisis: options and perspectives," Documentos de Proyectos 275, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. repec:wsi:jicepx:v:06:y:2015:i:01:n:s1793993315500039 is not listed on IDEAS
    9. -, 2009. "Políticas macroeconómicas en tiempos de crisis: opciones y perspectivas," Documentos de Proyectos 275, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Gómez Sabaini, Juan Carlos & Jiménez, Juan Pablo, 2009. "The role of tax policy in the context of the crisis: possibilities and limitations," Documentos de Proyectos 4169, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Camelia Minoiu & Patrick A. Imam, 2008. "Mauritius; A Competitiveness Assessment," IMF Working Papers 08/212, International Monetary Fund.
    12. Fofack, Hippolyte, 2009. "Africa and Arab Gulf states : divergent development paths and prospects for convergence," Policy Research Working Paper Series 5025, The World Bank.
    13. Fanelli, José María & Jiménez, Juan Pablo, 2009. "Crisis, volatilidad y política fiscal en América Latina," Documentos de Proyectos 4165, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Souleymane DIARRA, 2011. "Effets des Chocs de Produits de Base sur la Mobilisation des Recettes Publiques dans les Pays d’Afrique Sub-saharienne," Working Papers 201132, CERDI.
    15. Lee Robinson & Alice Nicole Sindzingre, 2012. "China’s Ambiguous Impacts on Commodity-Dependent Countries: the Example of Sub-Saharan Africa (with a Focus on Zambia)," EconomiX Working Papers 2012-39, University of Paris Nanterre, EconomiX.
    16. Patrick Imam & Gonzalo Salinas, 2015. "Explaining Episodes of Growth Accelerations, Decelerations, and Collapses in Western Africa," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(01), pages 1-33.
    17. Kacef, Osvaldo, 2009. "Crisis and public policies in Latin America and the Caribbean," Documentos de Proyectos 4168, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    18. Kacef, Osvaldo, 2009. "Crisis y políticas públicas en América Latina y el Caribe," Documentos de Proyectos 4164, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Souleymane Diarra, 2012. "Effets des Chocs de Produits de Base sur la Mobilisation des Recettes Publiques dans les Pays d'Afrique Sub-saharienne," Working Papers halshs-00658482, HAL.
    20. Romero-Ávila, Diego, 2009. "Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP," World Development, Elsevier, vol. 37(6), pages 1051-1068, June.
    21. BARBALAU, Adelina Georgiana, 2012. "Inflation targeting: dead or alive?," Romanian Distribution Committee Magazine, Romanian Distribution Committee, vol. 3(3), pages 41-49, September.

    More about this item

    Keywords

    Exchange rate depreciation; Economic growth; Terms of trade; Growth; terms of trade shocks; trade shocks; trade shock; terms of trade shock;

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