Terms of Trade Shocks and Economic Recovery
February 1, 2008
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Summary
This paper identifies factors that contribute to a fast recovery in growth after persistent negative terms of trade shocks, using a sample of 159 countries for 1970-2006. The results suggest that policies matter. Fast recoveries are fairly robustly related to real exchange rate depreciation and improvements in government stability and the institutional environment. A timely increase in aid may also support recovery.
Subject: Budget planning and preparation, Exchange rate adjustments, Real effective exchange rates, Real exchange rates, Terms of trade
Keywords: exchange rate, terms of trade shock, WP
Pages:
23
Volume:
2008
DOI:
Issue:
036
Series:
Working Paper No. 2008/036
Stock No:
WPIEA2008036
ISBN:
9781451868982
ISSN:
1018-5941
