Terms of Trade Shocks and Economic Recovery

Author/Editor:

Patrick A. Imam ; Eleonara Granziera ; Norbert Funke

Publication Date:

February 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2008/036

Subject:

Budget planning and preparation Exchange rate adjustments Real effective exchange rates Real exchange rates Terms of trade

Frequency:

Biannually

English

Publication Date:

February 1, 2008

ISBN/ISSN:

9781451868982/1018-5941

Stock No:

WPIEA2008036

Pages:

23

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