Terms Of Trade Cycles And External Adjustment

Author : Gustavo Adler,Mr.Nicolas E Magud,Alejandro M. Werner
Publisher : International Monetary Fund
Page : 30 pages
File Size : 40,8 Mb
Release : 2017-02-13
Category : Business & Economics
ISBN : 9781475578485

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Terms-of-Trade Cycles and External Adjustment by Gustavo Adler,Mr.Nicolas E Magud,Alejandro M. Werner Pdf

We study the process of external adjustment to large terms-of-trade level shifts—identified with a Markov-switching approach—for a large set of countries during the period 1960–2015. We find that adjustment to these shocks is relatively fast. Current accounts experience, on average, a contemporaneous variation of only about 1⁄2 of the magnitude of the price shock—indicating a significant volume offset—and a full adjustment within 3–4 years. Dynamics are largely symmetric for terms-of-trade booms and busts, as well as for advanced and emerging market economies. External adjustment is driven primarily by offsetting shifts in domestic demand, as opposed to variations in output (also reflected in the response of import rather than export volumes), indicating a strong income channel at play. Exchange rate flexibility appears to have played an important buffering role during booms, but less so during busts; while international reserve holdings have been a key tool for smoothing the adjustment process.

Author : Mr.Steven Phillips,Mr.Luis Catão,Mr.Luca Antonio Ricci,Mr.Rudolfs Bems,Ms.Mitali Das,Mr.Julian Di Giovanni,Ms.Filiz Unsal,Marola Castillo,Jungjin Lee,Jair Rodriguez,Mr.Mauricio Vargas
Publisher : International Monetary Fund
Page : 68 pages
File Size : 43,9 Mb
Release : 2014-01-13
Category : Business & Economics
ISBN : 9781484346785

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The External Balance Assessment (EBA) Methodology by Mr.Steven Phillips,Mr.Luis Catão,Mr.Luca Antonio Ricci,Mr.Rudolfs Bems,Ms.Mitali Das,Mr.Julian Di Giovanni,Ms.Filiz Unsal,Marola Castillo,Jungjin Lee,Jair Rodriguez,Mr.Mauricio Vargas Pdf

The External Balance Assessment (EBA) methodology has been developed by the IMF’s Research Department as a successor to the CGER methodology for assessing current accounts and exchange rates in a multilaterally consistent manner. Compared to other approaches, EBA emphasizes distinguishing between the positive empirical analysis and the normative assessment of current accounts and exchange rates, and highlights the roles of policies and policy distortions. This paper provides a comprehensive description and discussion of the 2013 version (“2.0”) of the EBA methodology, including areas for its further development.

Author : Fabian Bornhorst,Ms.Annalisa Fedelino,Jan Gottschalk,MissGabriela Dobrescu
Publisher : International Monetary Fund
Page : 39 pages
File Size : 42,9 Mb
Release : 2011-04-11
Category : Business & Economics
ISBN : 9781475510201

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When and How to Adjust Beyond the Business Cycle? A Guide to Structural Fiscal Balances by Fabian Bornhorst,Ms.Annalisa Fedelino,Jan Gottschalk,MissGabriela Dobrescu Pdf

Technical Notes and Manuals are produced by IMF departments to expand the dissemination of their technical assistance advice. These papers present general advice and guidance, drawn in part from unpublished technical assistance reports, to a broader audience. This new series was launched in August 2009.

Author : Mr.Francisco Roch
Publisher : International Monetary Fund
Page : 25 pages
File Size : 42,8 Mb
Release : 2017-09-29
Category : Business & Economics
ISBN : 9781484320648

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The Adjustment to Commodity Price Shocks in Chile, Colombia, and Peru by Mr.Francisco Roch Pdf

This paper presents a comparative analysis of the macroeconomic adjustment in Chile, Colombia, and Peru to commodity terms-of-trade shocks. The study is done in two steps: (i) an analysis of the impulse responses of key macroeconomic variables to terms-of-trade shocks and (ii) an event study of the adjustment to the recent decline in commodity prices. The experiences of these countries highlight the importance of flexible exchange rates to help with the adjustment to lower commodity prices, and staying vigilant in addressing depreciation pressures on inflation through tightening monetary policies. On the fiscal front, evidence shows that greater fiscal space, like in Chile and Peru, gives more room for accommodating terms-of-trade shocks.

Author : James Powell,Bank of Canada
Publisher : Unknown
Page : 124 pages
File Size : 50,8 Mb
Release : 2005
Category : Business & Economics
ISBN : UIUC:30112077032222

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A History of the Canadian Dollar by James Powell,Bank of Canada Pdf

Author : International Monetary Fund. Western Hemisphere Dept.
Publisher : International Monetary Fund
Page : 155 pages
File Size : 42,5 Mb
Release : 2017-05-19
Category : Business & Economics
ISBN : 9781475575224

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Regional Economic Outlook, April 2017, Western Hemisphere Department by International Monetary Fund. Western Hemisphere Dept. Pdf

With the global economy gaining some momentum, economies of Latin America and the Caribbean are recovering from a recession at the regional level in 2016. This gradual improvement can be understood as tale of two adjustments, external and fiscal, that are ongoing in response to earlier shocks. But headwinds from commodity terms-of-trade shocks and country-specific domestic factors are fading, paving the way for real GDP to grow by about 1 percent in 2017. Regional activity is expected to pick up further momentum in 2018, but at a slower pace than previously anticipated, while medium-term growth is projected to remain modest at about 2.6 percent. The outlook is shaped by key shifts in the global economic and policy landscape—where slow growth, low productivity, and high income inequality are creating pressure for a shift toward inward- looking policies in some advanced economies. Domestic fundamentals and developments, however, will continue to play a significant role in determining growth for the region. At the same time, risks to the outlook have widened in a setting of higher global uncertainty. In this challenging external context, countries should aim for completing fiscal and external adjustments to preserve or rebuild policy buffers. Charting a course toward higher, sustainable, and more equitable growth will also require strengthening structural reforms. Specifically, closing infrastructure gaps, improving the business environment, governance, and education outcomes, and encouraging female labor participation are necessary to boost medium-term growth and foster income convergence. Chapters in this report examine the ongoing external adjustment to terms-of-trade shifts, drivers of capital flows to the region, the role of the investor base, and macroeconomic impact of migration and remittances.

Author : Bertrand Gruss,Suhaib Kebhaj
Publisher : International Monetary Fund
Page : 38 pages
File Size : 41,7 Mb
Release : 2019-01-24
Category : Business & Economics
ISBN : 9781484393857

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Commodity Terms of Trade by Bertrand Gruss,Suhaib Kebhaj Pdf

This paper presents a comprehensive database of country-specific commodity price indices for 182 economies covering the period 1962-2018. For each country, the change in the international price of up to 45 individual commodities is weighted using commodity-level trade data. The database includes a commodity terms-of-trade index—which proxies the windfall gains and losses of income associated with changes in world prices—as well as additional country-specific series, including commodity export and import price indices. We provide indices that are constructed using, alternatively, fixed weights (based on average trade flows over several decades) and time-varying weights (which can account for time variation in the mix of commodities traded and the overall importance of commodities in economic activity). The paper also discusses the dynamics of commodity terms of trade across country groups and their influence on key macroeconomic aggregates.

Author : Mr. Nicolas E Magud,Samuel Pienknagura
Publisher : International Monetary Fund
Page : 51 pages
File Size : 40,9 Mb
Release : 2023-06-23
Category : Business & Economics
ISBN : 9798400247019

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External Shocks, Policies, and Tail-Shifts in Real Exchange Rates by Mr. Nicolas E Magud,Samuel Pienknagura Pdf

We use panel quantile regressions to study extreme (rather than average) movements in the distribution of the real effective exchange rate (REER) of small open economies. We document that global uncertainty (VIX) and global financial conditions (U.S. monetary policy) shocks have a strong impact on the distribution of the REER changes, with larger impacts in the tails of the distribution, and especially in economies with shallower FX markets, lower central bank credibility, and higher credit risk (i.e., weaker macro fundamentals). Foreign exchange intervention (FXI) partially offsets the impact of these shocks, especially in the left tail (large depreciations) and particularly in economies with weaker fundamentals but, more importantly, when FXI is used sporadically. Thus, our results highlight the importance of deepening FX markets, improving central bank credibility, and strengthening macro fundamentals against the potential dynamic trade-offs of overreliance on a policy that would exacerbate the previously mentioned frictions. While our results point to low effectiveness of capital flow management in preventing large REER movements, they seem to enable more impactful foreign exchange intervention in the immediate aftermath of shocks.

Author : Constance de Soyres,Anna Rogantini Picco,MissRanda Sab
Publisher : International Monetary Fund
Page : 40 pages
File Size : 40,7 Mb
Release : 2019-02-22
Category : Business & Economics
ISBN : 9781498301428

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Debt Build-up in Frontier Low-Income Developing Countries (LIDCs) since 2012: Global or Country-specific Factors and Way Forward? by Constance de Soyres,Anna Rogantini Picco,MissRanda Sab Pdf

This paper focuses on the debt build-up that frontier low-income developing countries (LIDCs) have faced since 2012. First, it documents a 20-percentage point increase in the external and government debt-to-GDP ratios, a composition shift toward higher non-concessional debt, and a rise in interest rate payments. Second, using panel regressions, it shows that while both global and country-specific factors are correlated with debt-to-GDP ratios over 1998–2016, global factors dominate for the period 2012–16. Third, through a small open-economy model, it shows that the projected tightening in global financial conditions would reduce debt-to-GDP ratios by less than the increase associated with the expected rise in investment.

Author : Maurice Obstfeld
Publisher : Unknown
Page : 64 pages
File Size : 45,6 Mb
Release : 2004
Category : Balance of trade
ISBN : UCSD:31822021212253

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External Adjustment by Maurice Obstfeld Pdf

"Gross stocks of foreign assets have increased rapidly relative to national outputs since 1990, and the short-run capital gains and losses on those assets can amount to significant fractions of GDP. These fluctuations in asset values render the national income and product account measure of the current account balance increasingly inadequate as a summary of the change in a country's net foreign assets. Nonetheless, unusually large current account imbalances, especially deficits, should remain high on policymakers' list of concerns, even for the richer and less credit-constrained countries. Extreme imbalances signal the need for large and perhaps abrupt real exchange rate changes in the future, changes that might have undesired political and financial consequences given the incompleteness of domestic and international asset markets. Furthermore, of the two sources of the change in net foreign assets -- the current account and the capital gain on the net foreign asset position -- the former is better understood and more amenable to policy influence. Systematic government attempts to manipulate international asset values in order to change the net foreign asset position could have a destabilizing effect on market expectations"--NBER website

Author : OECD
Publisher : OECD Publishing
Page : 141 pages
File Size : 44,5 Mb
Release : 2023-09-27
Category : Electronic
ISBN : 9789264902930

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OECD Economic Surveys: Peru 2023 by OECD Pdf

Peru's solid macroeconomic framework has driven substantial economic growth and poverty reduction in the past two decades. While the economy swiftly rebounded from the pandemic due to strong policy support, it exposed structural weaknesses such as a large informal sector and stark regional disparities in accessing public services.

Author : Mr.Yan Carriere-Swallow,Mr.Nicolas E Magud,Juan Yepez
Publisher : International Monetary Fund
Page : 30 pages
File Size : 54,7 Mb
Release : 2018-09-28
Category : Business & Economics
ISBN : 9781484378236

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No Pain, All Gain? Exchange Rate Flexibility and the Expenditure-Switching Effect by Mr.Yan Carriere-Swallow,Mr.Nicolas E Magud,Juan Yepez Pdf

Theoretical models on the relationship between prices and exchange rates predict that the magnitude of expenditure switching affects the optimal choice of exchange rate regime. Focusing on the transmission of terms-of-trade shocks to domestic real variables we document that the magnitude of the expenditure switching effect is positively associated to the degree of exchange rate flexibility. Moreover, results show that flexible exchange rates allow for significant adjustment in relative prices, which in turn lowers the burden of adjustment on demand for domestic goods and, in some cases, facilitates a faster and more durable external adjustment process. These results, which are robust to accounting for possible non-linearities due to balance sheet effects or currency mismatches, shed new light on the shock absorbing properties of flexible exchange rates.

Author : International Monetary Fund. Western Hemisphere Dept.
Publisher : International Monetary Fund
Page : 108 pages
File Size : 53,9 Mb
Release : 2015-10-07
Category : Business & Economics
ISBN : 9781513575209

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Regional Economic Outlook, October 2015: Western Hemisphere Department by International Monetary Fund. Western Hemisphere Dept. Pdf

Economies in the Western Hemisphere are generally seeing a slowdown in growth. The U.S. economy regained momentum after a slow start at the beginning of the year, while in Latin America and the Caribbean economic activity continues to decelerate. Stronger U.S. growth should benefit countries in the region, especially those with tighter links through trade, remittances, and tourism (Mexico, Central America, and the Caribbean). Weaker commodity prices for the foreseeable future, however, will continue to hurt South America's net commodity exporters, lowering national incomes, reducing investment, and worsening fiscal balances. These developments could, in turn, impede progress made in recent years in poverty reduction. These developments could, in turn, impede progress made in recent years in poverty reduction. Key risks, including an abrupt tightening of U.S. interest rates or a further slowdown in China, may disproportionately affect Latin America. Chapters in this report examine monetary policy in Latin America, including the region’s exposure to global financial shocks; the role of value chains and regional trade agreements in fostering trade integration; and financial market development in the region.

Author : Maurice Obstfeld,Kenneth S. Rogoff
Publisher : Unknown
Page : 54 pages
File Size : 41,8 Mb
Release : 1995
Category : Economics
ISBN : UCSD:31822018906016

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Exchange Rate Dynamics Redux by Maurice Obstfeld,Kenneth S. Rogoff Pdf

Author : International Monetary Fund. Research Dept.
Publisher : International Monetary Fund
Page : 304 pages
File Size : 44,7 Mb
Release : 2017-10-10
Category : Business & Economics
ISBN : 9781484312490

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World Economic Outlook, October 2017 by International Monetary Fund. Research Dept. Pdf

The global upswing in economic activity is strengthening. Global growth, which in 2016 was the weakest since the global financial crisis at 3.2 percent, is projected to rise to 3.6 percent in 2017 and to 3.7 percent in 2018. The growth forecasts for both 2017 and 2018 are 0.1 percentage point stronger compared with projections earlier this year. Broad-based upward revisions in the euro area, Japan, emerging Asia, emerging Europe, and Russia—where growth outcomes in the first half of 2017 were better than expected—more than offset downward revisions for the United States and the United Kingdom. But the recovery is not complete: while the baseline outlook is strengthening, growth remains weak in many countries, and inflation is below target in most advanced economies. Commodity exporters, especially of fuel, are particularly hard hit as their adjustment to a sharp step down in foreign earnings continues. And while short-term risks are broadly balanced, medium-term risks are still tilted to the downside. The welcome cyclical pickup in global activity thus provides an ideal window of opportunity to tackle the key policy challenges—namely to boost potential output while ensuring its benefits are broadly shared, and to build resilience against downside risks. A renewed multilateral effort is also needed to tackle the common challenges of an integrated global economy.