Private Saving and Terms of Trade Shocks : Evidence From Developing Countries

Author/Editor:

Jonathan David Ostry ; Carmen Reinhart

Publication Date:

October 1, 1991

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 examines the relationship between temporary terms of trade shocks and household saving in developing countries. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock, depending on the values of the intertemporal elasticity of substitution and the intratemporal elasticity of substitution between traded and nontraded goods. Empirical estimates of these two parameters are obtained using data from a sample of 13 developing countries, and then used to draw implications for the response of private saving to transitory terms of trade shocks.

Series:

Working Paper No. 91/100

Notes:

Also published in Staff Papers, Vol. 39, No. 3, September 1992.

English

Publication Date:

October 1, 1991

ISBN/ISSN:

9781451852318/1018-5941

Stock No:

WPIEA1001991

Format:

Paper

Pages:

26

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