What Causes Fluctuations in the Terms of Trade?

Marianne Baxter, Michael A. Kouparitsas

NBER Working Paper No. 7462
Issued in January 2000
NBER Program(s):International Trade and Investment

This paper investigates the sources of terms of trade volatility, specifically addressing the relative importance of goods-price effects vs. country-price effects. For fuel exporters, most of the terms of trade variation stems from goods-price effects, as one would have expected, a priori. For commodity exporters, there is great dispersion in the importance of goods price effects vs. country price effects, and no overall generalization is possible. Exporters of manufactured goods face terms of trade variation that appears to be about equally due to goods-price effects and country-price effects.

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Document Object Identifier (DOI): 10.3386/w7462

Published: Baxter, Marianne and Michael A. Kouparitsas. "What Can Account For Fluctuations In The Terms Of Trade?," International Finance, 2006, v9(1,Apr), 63-86.

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