On Terms of Trade and Capital Accumulation

This paper studies, within an OLG general equilibrium framework, the role of relative factor intensities in determining the relationship between the terms of trade and the capital stock. It shows that a diversified production equilibrium can be characterized by a positive association between these two variables if the investment sector is more labor-intensive and sector technologies are relatively dissimilar. Therefore, capital accumulation and terms-of-trade improvements do not require an import sector growing faster than the export sector when the latter is more capital-intensive. Large Stolper–Samuelson effects on factor incomes drive the results.     

What Determines Sectoral Trade in the Enlarged EU?

In this paper, we estimate a sectoral gravity model for trade within a heterogeneous trade bloc, the enlarged EU, comprised of a high‐income group (wealthiest EU), a middle‐income group (Greece, Portugal and Spain), and a low‐income group (new Central and Eastern European member countries). The estimation was conducted on sectors with different degrees of scale economies and skill‐intensities in the presence of transport costs. The results offer support for the call to incorporate trade theories based on both endowments and scale economies. In addition, whilst integrating poorer countries is beneficial for all of the participants in the bloc, there is still a role for a redistribution policy, such as the EU's Regional Policy, which should comprise a mix of policies, focusing on both income and education/skills, together with infrastructure development.     

The Foreign Trade and Sectoral Impact of Truck Road Pricing for Cross-Border Trade

Truck road pricing is on the brink of beingintroduced in a number of European countries.The experience gained from Switzerland, thefirst country worldwide to implement such adistant-dependent pricing scheme, has provedinvaluable. Nevertheless, significant questionsstill remain. The present paper attempts toprovide some clarity by analysing the welfareand sectoral impact resulting from theintroduction of truck road pricing with respectto foreign trade. It is shown that this impactcan be separated into four effects: the pureterms of trade effect, the tax revenue effect,the transit tax revenue effect and the resourcegain effect (resources set free by a reductionin transport activity). A CGE simulation ofeach of these effects identifies theirquantitative implications. Out of the foureffects the pure terms of trade effect turnsout to dominate at both the sectoral andaggregate level. It triggers a trade-inducedwelfare loss. The tax revenue effect, and lessso the transit revenue effect, mitigate thisloss. For a full road transport costinternalization a trade-induced welfare loss isquantified for Austria at 1.3%. Sensitivity ofthis and other aggregate variables is high withrespect to household reaction to transport taxrevenue refunding. The trade-induced welfareloss of variable size as explored in thisarticle counterbalances a fraction of thewelfare gain due to internalization.     

Commodity Prices and the Terms of Trade

On combining national terms-of-trade data for developing countries with world prices of internationally traded primary commodities, it is found that variation in the world prices of three or fewer key exported commodities account for 50% or more of the annual variation in the terms of trade of a typical developing country. A considerable fraction of the variation is specific to a particular commodity and, given that the overall importance of primary commodities differs across developing countries, it is possible to account for much of the heterogeneity across them. It is concluded that commodity price fluctuations should be central features of two related literatures: studies of business cycle transmission across developing and industrialized nations, and empirical work aimed at constructing perpetual claims on developing country incomes as suggested by Shiller in 1995.     

On Monetary Expansion, Terms of Trade and Economic Growth*

In a recent paper Roberts (1978) has extended Ramanathan's model (1975) to a two-sector, two-currency and two-country neoclassical growth model with flexible exchange rates. Under the assumption that the consumption good is relatively capital intensive, Roberts obtains two important propositions: an increase in domestic monetary expansion will increase the domestic overall capital intensity, decrease the foreign overall capital intensity, and worsen the terms of trade for the country importing the investment good; an increase in domestic monetary expansion may increase or decrease the level of trade. In this paper, we add to and generalize these results by using a simple yet thorough comparative statics analysis without the factor intensity condition.¹It will be seen that the complexity and ambiguity of Roberts' results are substantially reduced.     

Environmental Preservation, Sectoral Unemployment, and Trade in Resources

This paper develops a general equilibrium model to examine the optimal level of environmental preservation in terms of its costs and benefits for a closed as well as an open economy. The optimal preservation policy for a closed economy is to tax the general population and use the tax revenue to compensate affected workers. Furthermore, for a small open economy, free trade in resources can meet whatever shortage of domestic productive resources that may occur, thereby leading to a higher optimal level of environmental preservation.     

Terms of Trade,Competitive Advantage,and Trade Patterns

This paper investigates the competitive determination of the pattern of trade, seen as a choice of technique problem within a two-country, two-commodity, circulating capital model. It seeks to re-examine the analytical premises of the principle of comparative advantage. The establishment of competitive advantage is addressed in a Sraffian framework that allows the integration of the choice of technique problem to issues of growth and distribution. The focus is on exploring the validity of this principle when capital is internationally immobile—the context in which the principle was first postulated. Capital immobility imparts a degree freedom to the model. Closing the model and establishing a trade outcome on the basis of the principle of comparative advantage depends on the specification of appropriate boundary conditions. These boundary conditions boil down to some specification of relative scales of the trading partners and the scope for complete specialization and mutually beneficial gains from trade is circumscribed.     

Terms of Trade Indices in the Presence of Re-Export Trade*

This paper shows how the index of the commodity terms of trade as ordinarily constructed should be adjusted to take account of re-exports in the broad sense of the use of intermediate inputs in export activities which had been imported. The neglect of this adjustment produces indices which generally overstate the movement of the terms of trade. An empirical study of Singapore suggests that the bias may be substantial.     

服务贸易的货物贸易条件效应研究——基于伯格斯模型的分析与扩展

文章基于伯格斯模型,分析检验了服务贸易的净进口与我国货物价格贸易条件恶化之间的关系,初步证明了该模型在我国的适用性。进一步地,文章对2004-2008年我国价格贸易条件恶化有所趋缓这一特征进行了分析。结果表明,不同服务部门的净进口对我国货物贸易条件的影响不尽相同。文章得出的政策启示在于:当考察我国服务业开放和服务贸易自由化的收益时,要同时注意到货物价格贸易条件恶化可能带来的福利损失;我国在制定服务业对外开放与服务贸易自由化发展战略时,采取逐步开放和参与的战略尤为重要;另外,可以优先加强对通信、建筑、计算机和信息服务、咨询以及电影音像五大类服务部门的扶持以促进其出口。     

Primary Commodity Prices and the Terms of Trade*

This paper provides a survey of a range of issues involved in the analysis of primary commodity prices and the terms of trade. Particular emphasis is placed upon the long-run behaviour of the terms of trade between primary commodities and manufactures and the paper presents some new evidence regarding the long-run behaviour of Australia's terms of trade.     

Search,Dealers, and the Terms of Trade

I study a search-theoretic model with pairwise meetings where dealers arise endogenously. The extent of intermediation depends on its cost, trade frictions, and the dealers' ability to negotiate favorable terms of trade. Under Nash bargaining, there is a unique equilibrium where dealers buy and hold the low-storage-cost good and, depending on their relative bargaining power, resell it at a premium or a discount. The distribution of the terms of trade is nondegenerate unless storage cost and frictions vanish. Due to an externality created by intermediation, the efficient allocation can be achieved only if dealers can charge a positive markup.     

Real Gross Domestic Product and the Terms of Trade

Since their inception in the early 1960s, constant price national accounts have contained a measurement inconsistency in the expenditure accounts which flows through to the production accounts. The inconsistency has the effect of excluding changes in the terms of trade (the ratio of export prices to import prices) from real gross domestic product, so that it is unequal to real gross domestic income, which includes them. In economies, such as those of Australia and Canada, that experience substantial changes in the terms of trade, a real gross domestic product excluding those effects becomes a misleading guide for macroeconomic analysis and policy.     

Openness, Government Size and the Terms of Trade

This paper investigates the relationship between trade openness and the size of governments, both theoretically and empirically. We argue that openness can increase the size of governments through two channels: (1) a terms-of-trade externality, whereby trade lowers the domestic cost of taxation, and (2) the demand for insurance, whereby trade raises risk and public transfers. We provide a unified framework for studying and testing these two mechanisms. Our main theoretical prediction is that the relative strength of the two explanations depends on a key parameter, namely, the elasticity of substitution between domestic and foreign goods. Moreover, while the first mechanism is inefficient from the standpoint of world welfare, the second, instead, is optimal. In the empirical part of the paper, we provide new evidence on the positive association between openness and government size and we explore its determinants. Consistent with the terms-of-trade externality channel, we show that the correlation is contingent on a low elasticity of substitution between domestic and foreign goods. Our findings raise warnings that globalization may have led to inefficiently large governments.     

The Effects of Technology Changes on Sectoral Trade Patterns*

We develop a model in which sectoral trade patterns depend on both the technology common to all sectors and the technologies specific to each sector. Changes in the common technology level affect sectoral trade patterns through their impact on intertemporal optimization behavior, while changes in the sector‐specific technology levels affect sectoral trade patterns by influencing comparative advantage. The model shows: (1) unexpected increases in the common technology level worsen sectoral trade balances, but expected increases in the common technology level improve them; and (2) given other countries’ sectoral technology levels, an increase in a sector‐specific technology level relative to other sectors improves sectoral trade balances through its operation on comparative advantage. Using Japanese data, the empirical results reported in this paper support the model’s predictions.     

Labour Market Regulations and the Sectoral Reallocation of Workers: The Case of Trade Reforms

In this paper I highlight the importance of incorporating the institutional features of local labour markets into the analysis of trade reforms. A trade reform is often deemed beneficial because the elimination of trade barriers allows labour to reallocate towards those sectors in the economy in which the country has a comparative advantage. The amount and speed of the reallocation, however, and the post-reform behaviour of output, productivity and welfare, will depend on how regulated the labour market is. First, I document that high firing costs slow down the intersectoral reallocation of labour after a trade reform. Second, in order to isolate the effect of firing costs on labour reallocation, output and welfare after a trade reform, I build a dynamic general equilibrium model. I find that if a country does not liberalize its labour market at the outset of its trade reform, the intersectoral reallocation of workers will be 30% slower, and as much as 30% of the gains in real output and labour productivity in the years following the trade reform will be lost. From a policy standpoint, the message is that while trade reforms are desirable, they need to be complemented by labour market reforms in order to be fully successful.     

Technical Progress and the North–South Terms of Trade

In a classical world where prices of both northern manufactures and southern raw materials are determined by market demand and supply, technical progress in one region leads to a terms-of-trade improvement of the other region irrespective of whether technical progress is labor-saving or raw-material saving. But in a neo-Kaleckian framework characterized by surplus capacity, and an effective demand problem in the North and a capacity constraint in the South, the terms of trade would turn against the South even if the North experienced a higher rate of technical progress than that of the South.     

Are Terms of Trade Rises Inflationary?

This article explores the relationship between the terms of trade and inflation. It shows, both analytically and empirically, that the exchange rate response to a change in the terms of trade is crucial to the inflation outcome. It demonstrates the existence of a ‘threshold’ exchange rate response. Our best estimate is that a rise in the terms of trade is inflationary if the associated rise in the real exchange rate is less than about 1/3–1/2 of the rise in the terms of trade. However, if appreciation of the real exchange rate is larger than this, the consequent fall in the domestic price of importables is large enough that the terms of trade rise reduces inflation, at least in the short run.     

Cross-Border Pollution,Terms of Trade,and Welfare

We construct a two-good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders. Governments in both countries impose emission taxes non-cooperatively. Within this framework, we examine the effect of changes in the degree of cross-border pollution on Nash emission taxes, emission levels and welfare. We do so under two scenarios: when changes in cross-border pollution do not affect domestic pollution (non-strategic) and when they do (strategic). We also examine the effect of changes in international terms of trade on pollution and welfare when cross-border pollution is non-strategic.      

贸易条件恶化论的发展及意义

本文通过对贸易条件恶化论进行全面的分析，得出了低技术层次出口商品相对于高技术层次出口商品存在着长期贸易条件的恶化，并且随着科技的进步，贸易条件恶化的范围越来越广，但一国可以通过持续的技术进步来改善贸易条件，从而得出要改变我国不利的贸易条件，其最佳途径是不懈的技术进步。