Savings and the Terms of Trade under Borrowing Constraints

• Tác giả: Pierre-Richard Agenor
• Ngôn ngữ: eng
• Ký hiệu phân loại: 332.2 Specialized banking institutions
• Thông tin xuất bản: World Bank, Washington, DC, 2014
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 309806
• Chủ đề: 1. ARBITRAGE; 2. ASYMMETRIC SHOCKS; 3. BANK DEPOSITS; 4. BORROWING; 5. BUDGET DEFICITS

Tóm tắt

The authors examine the extent to which permanent terms-of-trade shocks have an asymmetric effect on private savings. Using a simple three-period model, they show that if households expect to face binding constraints on borrowing in bad states of nature (when the economy is in a long trough rather than a sharp peak). Savings rates will respond asymmetrically to favorable movements in the permanent component of the terms of trade - in contrast with the predictions of conventional consumption-smoothing models. They test the asymmetric effects of terms-of-trade disturbances using an econometric model that controls for various standard determinants of private savings. The results - based on panel data for non-oil commodity exporters of Sub-Saharan Africa for 1980-96 (a group of countries for which movements in the terms of trade have traditionally represented a key source of macroeconomic shocks) - indicate that increases in the permanent component of the terms of trade (measured using three alternative filtering techniques) indeed tend to be associated with higher rates of private savings.