IMF Working Papers

Export Instability and the External Balance in Developing Countries

By Atish R. Ghosh, Jonathan David Ostry

January 1, 1994

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Format: Chicago

Atish R. Ghosh, and Jonathan David Ostry. Export Instability and the External Balance in Developing Countries, (USA: International Monetary Fund, 1994) accessed November 8, 2024
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

Uncertainty about the export earnings accruing to a country (sometimes referred to as export instability) is an important source of macroeconomic uncertainty in many developing countries. Theory predicts that countries should react to increases in this form of uncertainty by increasing their level of savings. The resulting asset accumulations would then act as the country’s insurance against the greater riskiness in its income stream. The paper tests this implication for a large sample of developing countries. In general, the results suggest that developing countries have indeed responded to increases in export instability by building up precautionary savings balances.

Subject: Balance of payments, Consumption, Current account, Export earnings, Exports, International trade, National accounts, Precautionary savings

Keywords: Africa, Asia and Pacific, Consumption, Current account, Export base, Export diversification result, Export diversification strategy, Export earnings, Export instability, Exports, Fuel exporter, Middle East, Precautionary savings, Slope coefficient, Western Hemisphere, WP

Publication Details

  • Pages:

    30

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1994/008

  • Stock No:

    WPIEA0081994

  • ISBN:

    9781451927726

  • ISSN:

    1018-5941

Notes

Also published in Staff Papers, Vol. 41, No. 2, June 1994.

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