UNU-WIDER Terms of Trade Shocks and the Current Account in Small Island States
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Terms of Trade Shocks and the Current Account in Small Island States
This paper investigates the dynamic relationship between terms of trade shocks and the current account in selected small islands developing states. The findings show that the terms of trade explain a significant proportion of the variation in the current account balances. Also, the current account balances reflect a J-curve type reaction to terms of trade innovations. Real output also reacts negatively to changes in the terms of trade.
- Publisher:
- UNU-WIDER
- Series:
- WIDER Research Paper
- Volume:
- 2007/20
- Title:
- Terms of Trade Shocks and the Current Account in Small Island States
- Authors:
- Amelia U. Santos-Paulino
- Publication date:
- April 2007
- ISSN Web:
- 1810-2611
- ISBN Web:
- 9291909599
- ISBN 13 Web:
- 9789291909599
- Copyright holder:
- © UNU-WIDER
- Copyright year:
- 2007
- Keywords:
- terms of trade shocks, current account balance, panel data, vector autoregression, VAR
- JEL:
- C33, E21, F32
- Project:
- Fragility and Development
- Sponsor:
- UNU-WIDER gratefully acknowledges the financial contributions to the project by The Australian Agency for International Development (AusAID), the Finnish Ministry for Foreign Affairs, and the UK Department for International Development-DFID.
- Format:
- online