The Balance of Trade, the Terms of Trade, and the Real Exchange Rate : An Intertemporal Optimizing Framework »
Series: IMF Working Papers
Author(s): International Monetary Fund
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 January 1988
Keywords: terms of trade, terms of trade shocks, relative price, trade changes, real rate of interest
This paper uses an intertemporal optimizing model of a small open economy to analyze how terms of trade changes affect real exchange rates and the trade balance. We consider temporary current, anticipated future, a...