TY - JOUR
T1 - The income and terms of trade effects
T2 - a permanent versus transitory decomposition in US trade
AU - Kim, Yoonbai
PY - 1994/12
Y1 - 1994/12
N2 - This paper develops an empirical analysis of the US trade balance with particular attention to the distinction between permanent and transitory disturbances to income and the terms of trade arising from real/monetary and demand/supply shocks. The results indicate that the income effects on the trade balance differ remarkably depending on whether a given change is permanent or transitory. For instance, a permanent increase in income deteriorates the trade balance whereas a transitory increase improves it. The results are contrasted to the predictions of the Mundell-Fleming-Dornbusch model and intertemporal models. (JEL F32).
AB - This paper develops an empirical analysis of the US trade balance with particular attention to the distinction between permanent and transitory disturbances to income and the terms of trade arising from real/monetary and demand/supply shocks. The results indicate that the income effects on the trade balance differ remarkably depending on whether a given change is permanent or transitory. For instance, a permanent increase in income deteriorates the trade balance whereas a transitory increase improves it. The results are contrasted to the predictions of the Mundell-Fleming-Dornbusch model and intertemporal models. (JEL F32).
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U2 - 10.1016/0261-5606(94)90037-X
DO - 10.1016/0261-5606(94)90037-X
M3 - Article
AN - SCOPUS:0002279679
SN - 0261-5606
VL - 13
SP - 658
EP - 678
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
IS - 6
ER -