Document Type
Article
Language
eng
Format of Original
13 p.; 23 cm
Publication Date
11-2015
Publisher
Elsevier
Source Publication
Journal of Comparative Economics
Source ISSN
0147-5967
Abstract
Economic agents in the developing countries are subject to tight credit constraints, which are more pronounced during bad state of nature. Thus, adverse shocks to commodity prices in the world market can force them to reduce savings by a larger amount than they would otherwise have. Empirical analysis using a dynamic GMM model and data from 45 developing countries confirm that most of the determinants of savings identified in the literature also apply to the developing countries. The transitory component in the terms of trade have a larger positive impact than the permanent component. This reflects the lack of access to foreign borrowing. Although the impact of terms of trade shocks is found to be asymmetric, the magnitude of the impact appears to be relatively small. Results show some differences in the response of savings in the three regions considered here. The results are, however, robust for alternative estimators and determinants.
Recommended Citation
Chowdhury, Abdur, "Terms of Trade Shocks and Private Savings in the Developing Countries" (2015). Economics Faculty Research and Publications. 541.
https://epublications.marquette.edu/econ_fac/541
Comments
Accepted version. Journal of Comparative Economics, Vol. 43, No. 4 (November 2015): 1122-1134. DOI. © 2015 Elsevier B.V. Used with permission.