American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Terms-of-Trade Shocks Are Not All Alike
American Economic Journal: Macroeconomics
vol. 17,
no. 2, April 2025
(pp. 24–64)
Abstract
Terms of trade are an inaccurate empirical proxy for how fluctuations in international prices affect the economy. To capture the relevance of terms-of-trade fluctuations for the domestic business cycle, the role of export and import prices needs to be analyzed separately. Using a sample of developing economies, we find that the economy's response to a positive export price shock does not mirror the response to a negative import price shock.Citation
Di Pace, Federico, Luciana Juvenal, and Ivan Petrella. 2025. "Terms-of-Trade Shocks Are Not All Alike." American Economic Journal: Macroeconomics 17 (2): 24–64. DOI: 10.1257/mac.20220035Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E32 Business Fluctuations; Cycles
- E43 Interest Rates: Determination, Term Structure, and Effects
- F14 Empirical Studies of Trade
- F44 International Business Cycles
- O11 Macroeconomic Analyses of Economic Development