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Working Paper
North-South terms of trade: an empirical investigation
My empirical analysis a reveals a strong link between the terms of trade of industrial and developing countries. I show that the terms of trade developing countries are essentially the relative prices of commodity exports and manufactured imports. Similarly, I find that terms of trade fluctuations of industrial countries are heavily influenced by movements in the relative price of manufactured exports and commodity imports. This means that improvements in the terms of trade of developing countries imply a worsening in the terms of trade of developing industrial countries, and vice versa. One ...
Journal Article
Are U.S. and Seventh District business cycles alike?
This article explains the recent high levels of residential investment and rates of homeownership.
Working Paper
Why do countries pursue bilateral trade agreements: a case study of North America
Current trade theory argues that countries pursue bilateral trade agreements to escape from a terms-of-trade driven prisoners' dilemma. This paper offers an empirical test of the theory. Using simulation results from a quantitative trade model of North America I show that the non-cooperative and cooperative payoffs implicit in the CFTA and NAFTA take on the two essential elements of a prisoners' dilemma. First, my results suggest that irrespective of county size unilateral liberalization makes the liberalizing country worse off, while making its regional trading partner better off. Next, I ...
Journal Article
Understanding U.S. regional cyclical comovement: How important are spillovers and common shocks?
This article develops a statistical model to study the business cycles of the eight U.S. Bureau of Economic Analysis regions. The author shows that the high level of cyclical comovement among per capita incomes of U.S. regions is the byproduct of common shocks to the regions rather than shocks that originate in one region and subsequently spill over to other regions.
Working Paper
Determinants of business cycle comovement: a robust analysis
This paper investigates the determinants of business cycle comovement between countries. Our dataset includes over 100 countries, both developed and developing. We search for variables that are ?robust? in explaining comovement, using the approach of Leamer (1983). Variables considered are (i) bilateral trade between countries; (ii) total trade in each country; (iii) sectoral structure; (iv) similarity in export and import baskets; (v) factor endowments; and (vi) gravity variables. We find that bilateral trade is robust. However, two variables that the literature has argued are important for ...
Working Paper
What can account for fluctuations in the terms of trade?
Fluctuations in the terms of trade the price of a country?s exports relative to the price of its imports are a source of perennial concern to policymakers in developing countries and industrialized nations alike. Terms of trade growth is extremely volatile and can lead to sudden changes in a country?s economic health. This paper seeks to understand the sources of fluctuations in the terms of trade. We decompose a country?s terms of trade volatility into a component stemming from differences in the composition of import baskets and export baskets, which we define as a goods price effect, and a ...
Journal Article
Evidence of the North--South business cycle
This article examines the fluctuations of two regional economies: the developed, industrial goods exporting countries of the world ("North") and the developing, commodity exporting countries ("South"). The author finds that these very different regions have similar business cycle characteristics and that cyclical fluctuations in one region are positively correlated with fluctuations in other. Preliminary data analysis suggests that cyclical fluctuations in the South are caused by fluctuations that originate in the North.