Asymmetric Non-Commodity Output Responses to Commodity Price Shocks
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Summary:
This paper focuses on identifying potential asymmetric responses of non-commodity output growth in times of positive and negative commodity terms-of-trade shocks. Using a sample of 27 oil-exporting countries and a panel VAR method, the study finds: 1) the short-and medium-run response of real non-commodity GDP growth is larger for negative shocks than positive shocks; 2) this asymmetry is more pronounced in countries with weak pre-existing fundamentals–high levels of public debt and low levels of international reserves–which also serve to amplify the volatility of the response; 3) the output response to positive shocks is stronger following a sustained period of CTOT increases, while the impact of negative shocks on output are more damaging when they occur after a period of CTOT decline.
Series:
Working Paper No. 2021/163
Subject:
Commodities Commodity price fluctuations Commodity price indexes Commodity prices Oil Prices
Frequency:
regular
English
Publication Date:
June 11, 2021
ISBN/ISSN:
9781513573359/1018-5941
Stock No:
WPIEA2021163
Pages:
38
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