Export Instability and the External Balance in Developing Countries

Author/Editor:

Atish R. Ghosh ; Jonathan David Ostry

Publication Date:

January 1, 1994

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.

Series:

Working Paper No. 94/8

Notes:

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

English

Publication Date:

January 1, 1994

ISBN/ISSN:

9781451927726/1018-5941

Stock No:

WPIEA0081994

Format:

Paper

Pages:

30

Please address any questions about this title to publications@imf.org