International Evidenceon the Determinants of Trade Dynamics

ByEswar S Prasad, Jeffery A. Gable

December 1, 1997

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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 provides some new empirical perspectives on the relationship between international trade and macroeconomic fluctuations in industrial economies. First, a comprehensive set of stylized facts concerning fluctuations in trade variables and their determinants are presented. A measure of the quantitative importance of international trade for the propagation of domestic business cycles is then constructed, focusing on the role of external trade as a catalyst for cyclical recoveries. Finally, structural vector autoregression models are used to characterize the joint dynamics of output, exchange rates, and trade variables in response to different types of macroeconomic shocks.

Subject: Business cycles, Economic growth, Exchange rates, Exports, Foreign exchange, International trade, Real exchange rates, Trade balance

Keywords: business cycle recovery, business cycles, demand condition, exchange rate depreciation, exchange rates, Exports, Global, merchandise trade number, net trade balance, OECD industrial economies, Real exchange rates, supply shock, trade, Trade balance, trade balance fluctuation, trade balance to output growth, trade dynamics, trade ratio, trade variable, trade volume, trade-weighted average, WP

Pages:
43
Volume:
1997
DOI:
https://doi.org/10.5089/9781451858549.001
Issue:
172
Series:
Working Paper No. 1997/172
Stock No:
WPIEA1721997
ISBN:
9781451858549
ISSN:
1018-5941

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Notes

Also published in Staff Papers, Vol. 45, No. 3, September 1998.

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