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International Trade and the Business Cycle
Author:
Mr. Eswar S Prasad
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Series:
IMF Working Papers
Volume/Issue:
Volume 1999: Issue 056
Language:
English
Publication Date:
01 Apr 1999
DOI:
https://doi.org/10.5089/9781451847680.001
ISBN:
9781451847680
ISSN:
1018-5941
Pages:
25
Keywords:
WP; supply and demand; Trade balance; business cycles; vector autoregressions; supply and demand demand shock; trade balance response; exchange rate fluctuation; ratio of the trade balance; response to a supply shock; trade variable; demand shocks to the forecast error variance; exchange rate depreciation; time series; Real exchange rates; Supply shocks; Exchange rates
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper develops a new empirical framework for analyzing the dynamics of the trade balance in response to different types of macroeconomic shocks. The model provides a synthetic perspective on the conditional correlations between the business cycle and the trade balance that are generated by different shocks and attempts to reconcile these results with unconditional correlations found in the data. The results suggest that, in the post-Bretton Woods period, nominal shocks have been an important determinant of the forecast error variance for fluctuations in the trade balances of the Group of Seven countries.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund