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Co-movements in terms of trade volatility in land-abundant countries

  • María Virginia Mattheus
  • Alberto Martín Díaz Cafferata
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    We conjecture that extreme land abundant endowment constitutes a structural restriction driving sectoral specialization and terms of trade volatility. We estimate and compare several volatility indicators for Argentina, Australia and New Zealand in 1870-2009 finding co-movements, structural breaks in variability, significant cross correlations between TOT cycles, and in some cases heteroskedasticity. If “first nature” land-abundance is a long-term structural restriction, development policies for this type of economies must balance reductions in TOT volatility through export diversification (at rising costs) and a combination of efficiency improvements and internal flexibility to manage volatility effects.

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    File URL: http://www2.uah.es/iaes/publicaciones/DT_07_11.pdf
    File Function: First version, 2011
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    Paper provided by Instituto Universitario de Análisis Económico y Social in its series Working Papers with number 07/11.

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    Length: 42 pages
    Date of creation: Oct 2011
    Date of revision:
    Handle: RePEc:uae:wpaper:0711
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