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