01700cas a2200241 a 4500 AALejournalIMF008288 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451852066 1018-5941 BD-DhAAL BD-DhAAL Mendoza, Enrique. The Terms of Trade and Economic Fluctuations / Enrique Mendoza. Washington, D.C. : International Monetary Fund, 1992. 1 online resource (72 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students A three-good, stochastic intertemporal equilibrium model of a small open economy is used to examine the link between terms of trade and business cycles. Equilibrium co-movements of model economies representing industrial and developing countries are computed and compared with the stylized facts of 30 countries. The results show that terms-of-trade shocks account for half of observed output variability and that the model mimics the Harberger-Laursen-Metzler effect and produces large deviations from purchasing power parity. The elasticity of substitution between tradable and nontradable goods and the persistence of the shocks play a key role in producing these results. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1992/098 Full text available on IMF http://elibrary.imf.org/view/journals/001/1992/098/001.1992.issue-098-en.xml IMF e-Library