Terms of trade shocks and the current account in a unified currency area

✍ Scribed by L. Sahely; R. Darius; O. Williams

• Publisher: John Wiley and Sons
• Year: 2001
• Tongue: English
• Weight: 87 KB
• Volume: 13
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.846

✦ Synopsis

Abstract

The recent debate over the European Union's banana import regime that ensued following the World Trade Organization ruling that found it to be illegal, has implications for those developing countries that rely on preferential access to this market. This paper finds that for those territories of the Eastern Caribbean Central Bank monetary union, the terms of trade shocks are not very persistent and have a large temporary component. In addition, the terms of trade shocks had a small impact on the current account. These shocks however had a larger impact on the supply side suggesting price sensitivity of farmers. Copyright © 2001 John Wiley & Sons, Ltd.