Savings and the Terms of Trade under Borrowing Constraints
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 n...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/06/437121/savings-terms-trade-under-borrowing-constraints http://hdl.handle.net/10986/19837 |
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okr-10986-198372021-04-23T14:03:46Z Savings and the Terms of Trade under Borrowing Constraints Agenor, Pierre-Richard Aizenman, Joshua ARBITRAGE ASYMMETRIC SHOCKS BANK DEPOSITS BORROWING BUDGET DEFICITS CAPITAL GOODS CAPITAL MARKET CAPITAL MARKETS CENTRAL GOVERNMENTS COMMODITY EXPORTERS CONSUMERS CROSS- COUNTRY DATA CROSS-COUNTRY REGRESSION CROSS-SECTIONAL DATA CURRENCY CURRENCY UNITS CURRENT ACCOUNT CURRENT ACCOUNT SURPLUS CURRENT EXPENDITURES DATA SET DEPENDENT VARIABLE DEVELOPING COUNTRIES DIMINISHING MARGINAL UTILITY DISSAVINGS DOMESTIC FINANCE DOMESTIC LIQUIDITY ECONOMETRIC MODEL ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICY ECONOMISTS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EXPECTED UTILITY EXPECTED VALUE EXPENDITURES EXPLANATORY VARIABLES EXPORT PRICE EXPORTERS EXPORTS FINANCIAL DEVELOPMENT FINANCIAL LIBERALIZATION FINANCIAL MARKETS FUNCTIONAL FORM GDP DEFLATOR GNP GNP PER CAPITA GNP PER CAPITA GROWTH RATE GROSS DOMESTIC PRODUCT GROSS NATIONAL PRODUCT GROWTH RATE INCENTIVES TO SAVE INCOME INCOME EFFECT INCOME SHOCKS INCOMES INDIVIDUAL COUNTRIES INFLATION INFLATION RATE LAGGED DEPENDENT LIQUIDITY LIQUIDITY CONSTRAINTS MACROECONOMIC EFFECTS MACROECONOMIC IMPLICATIONS MACROECONOMIC INSTABILITY MACROECONOMIC SHOCKS MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL UTILITY MEAN VALUE NATIONAL DEFENSE NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE SHOCK NEGATIVE WEALTH NET EXPORTS NOMINAL INTEREST RATES NON-OIL COMMODITY NON-OIL COMMODITY EXPORTERS OIL OIL EXPORTERS OIL PRICE OIL PRICES PER CAPITA GROWTH PER CAPITA INCOME PERMANENT INCOME PERMANENT INCOME HYPOTHESIS POLICY RESEARCH POOR COUNTRIES POSITIVE EFFECT POSITIVE RELATIONSHIP POSITIVE SHOCKS POVERTY REDUCTION PRICE INDEX PRIVATE AGENTS PRIVATE SECTOR PROPENSITY TO SAVE PUBLIC CONSUMPTION PUBLIC SAVINGS PUBLIC SECTOR REAL GDP REAL GNP REAL INCOME REAL INTEREST RATE REGRESSION RESULTS REGRESSION TECHNIQUES RELATIVE IMPORTANCE RELATIVE PRICE OF CAPITAL RISK AVERSION SAVINGS SAVINGS RATES SIGNIFICANT NEGATIVE SOVEREIGN RISK TAX REVENUE TERMS OF TRADE TIME SERIES TRADE EFFECTS TRADE SHOCKS TRADE VARIABLES TRANSITORY SHOCKS TROUGH WEALTH 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. 2014-08-28T18:41:14Z 2014-08-28T18:41:14Z 2000-06 http://documents.worldbank.org/curated/en/2000/06/437121/savings-terms-trade-under-borrowing-constraints http://hdl.handle.net/10986/19837 English en_US Policy Research Working Paper;No. 2381 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Sub-Saharan Africa |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ARBITRAGE ASYMMETRIC SHOCKS BANK DEPOSITS BORROWING BUDGET DEFICITS CAPITAL GOODS CAPITAL MARKET CAPITAL MARKETS CENTRAL GOVERNMENTS COMMODITY EXPORTERS CONSUMERS CROSS- COUNTRY DATA CROSS-COUNTRY REGRESSION CROSS-SECTIONAL DATA CURRENCY CURRENCY UNITS CURRENT ACCOUNT CURRENT ACCOUNT SURPLUS CURRENT EXPENDITURES DATA SET DEPENDENT VARIABLE DEVELOPING COUNTRIES DIMINISHING MARGINAL UTILITY DISSAVINGS DOMESTIC FINANCE DOMESTIC LIQUIDITY ECONOMETRIC MODEL ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICY ECONOMISTS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EXPECTED UTILITY EXPECTED VALUE EXPENDITURES EXPLANATORY VARIABLES EXPORT PRICE EXPORTERS EXPORTS FINANCIAL DEVELOPMENT FINANCIAL LIBERALIZATION FINANCIAL MARKETS FUNCTIONAL FORM GDP DEFLATOR GNP GNP PER CAPITA GNP PER CAPITA GROWTH RATE GROSS DOMESTIC PRODUCT GROSS NATIONAL PRODUCT GROWTH RATE INCENTIVES TO SAVE INCOME INCOME EFFECT INCOME SHOCKS INCOMES INDIVIDUAL COUNTRIES INFLATION INFLATION RATE LAGGED DEPENDENT LIQUIDITY LIQUIDITY CONSTRAINTS MACROECONOMIC EFFECTS MACROECONOMIC IMPLICATIONS MACROECONOMIC INSTABILITY MACROECONOMIC SHOCKS MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL UTILITY MEAN VALUE NATIONAL DEFENSE NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE SHOCK NEGATIVE WEALTH NET EXPORTS NOMINAL INTEREST RATES NON-OIL COMMODITY NON-OIL COMMODITY EXPORTERS OIL OIL EXPORTERS OIL PRICE OIL PRICES PER CAPITA GROWTH PER CAPITA INCOME PERMANENT INCOME PERMANENT INCOME HYPOTHESIS POLICY RESEARCH POOR COUNTRIES POSITIVE EFFECT POSITIVE RELATIONSHIP POSITIVE SHOCKS POVERTY REDUCTION PRICE INDEX PRIVATE AGENTS PRIVATE SECTOR PROPENSITY TO SAVE PUBLIC CONSUMPTION PUBLIC SAVINGS PUBLIC SECTOR REAL GDP REAL GNP REAL INCOME REAL INTEREST RATE REGRESSION RESULTS REGRESSION TECHNIQUES RELATIVE IMPORTANCE RELATIVE PRICE OF CAPITAL RISK AVERSION SAVINGS SAVINGS RATES SIGNIFICANT NEGATIVE SOVEREIGN RISK TAX REVENUE TERMS OF TRADE TIME SERIES TRADE EFFECTS TRADE SHOCKS TRADE VARIABLES TRANSITORY SHOCKS TROUGH WEALTH |
| spellingShingle |
ARBITRAGE ASYMMETRIC SHOCKS BANK DEPOSITS BORROWING BUDGET DEFICITS CAPITAL GOODS CAPITAL MARKET CAPITAL MARKETS CENTRAL GOVERNMENTS COMMODITY EXPORTERS CONSUMERS CROSS- COUNTRY DATA CROSS-COUNTRY REGRESSION CROSS-SECTIONAL DATA CURRENCY CURRENCY UNITS CURRENT ACCOUNT CURRENT ACCOUNT SURPLUS CURRENT EXPENDITURES DATA SET DEPENDENT VARIABLE DEVELOPING COUNTRIES DIMINISHING MARGINAL UTILITY DISSAVINGS DOMESTIC FINANCE DOMESTIC LIQUIDITY ECONOMETRIC MODEL ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC POLICY ECONOMISTS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EXPECTED UTILITY EXPECTED VALUE EXPENDITURES EXPLANATORY VARIABLES EXPORT PRICE EXPORTERS EXPORTS FINANCIAL DEVELOPMENT FINANCIAL LIBERALIZATION FINANCIAL MARKETS FUNCTIONAL FORM GDP DEFLATOR GNP GNP PER CAPITA GNP PER CAPITA GROWTH RATE GROSS DOMESTIC PRODUCT GROSS NATIONAL PRODUCT GROWTH RATE INCENTIVES TO SAVE INCOME INCOME EFFECT INCOME SHOCKS INCOMES INDIVIDUAL COUNTRIES INFLATION INFLATION RATE LAGGED DEPENDENT LIQUIDITY LIQUIDITY CONSTRAINTS MACROECONOMIC EFFECTS MACROECONOMIC IMPLICATIONS MACROECONOMIC INSTABILITY MACROECONOMIC SHOCKS MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL UTILITY MEAN VALUE NATIONAL DEFENSE NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE SHOCK NEGATIVE WEALTH NET EXPORTS NOMINAL INTEREST RATES NON-OIL COMMODITY NON-OIL COMMODITY EXPORTERS OIL OIL EXPORTERS OIL PRICE OIL PRICES PER CAPITA GROWTH PER CAPITA INCOME PERMANENT INCOME PERMANENT INCOME HYPOTHESIS POLICY RESEARCH POOR COUNTRIES POSITIVE EFFECT POSITIVE RELATIONSHIP POSITIVE SHOCKS POVERTY REDUCTION PRICE INDEX PRIVATE AGENTS PRIVATE SECTOR PROPENSITY TO SAVE PUBLIC CONSUMPTION PUBLIC SAVINGS PUBLIC SECTOR REAL GDP REAL GNP REAL INCOME REAL INTEREST RATE REGRESSION RESULTS REGRESSION TECHNIQUES RELATIVE IMPORTANCE RELATIVE PRICE OF CAPITAL RISK AVERSION SAVINGS SAVINGS RATES SIGNIFICANT NEGATIVE SOVEREIGN RISK TAX REVENUE TERMS OF TRADE TIME SERIES TRADE EFFECTS TRADE SHOCKS TRADE VARIABLES TRANSITORY SHOCKS TROUGH WEALTH Agenor, Pierre-Richard Aizenman, Joshua Savings and the Terms of Trade under Borrowing Constraints |
| geographic_facet |
Sub-Saharan Africa |
| relation |
Policy Research Working Paper;No. 2381 |
| description |
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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Agenor, Pierre-Richard Aizenman, Joshua |
| author_facet |
Agenor, Pierre-Richard Aizenman, Joshua |
| author_sort |
Agenor, Pierre-Richard |
| title |
Savings and the Terms of Trade under Borrowing Constraints |
| title_short |
Savings and the Terms of Trade under Borrowing Constraints |
| title_full |
Savings and the Terms of Trade under Borrowing Constraints |
| title_fullStr |
Savings and the Terms of Trade under Borrowing Constraints |
| title_full_unstemmed |
Savings and the Terms of Trade under Borrowing Constraints |
| title_sort |
savings and the terms of trade under borrowing constraints |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/06/437121/savings-terms-trade-under-borrowing-constraints http://hdl.handle.net/10986/19837 |
| _version_ |
1764441532529639424 |