01697cas a2200241 a 4500 AALejournalIMF010168 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451930924 1018-5941 BD-DhAAL BD-DhAAL International Monetary Fund. The Balance of Trade, the Terms of Trade, and the Real Exchange Rate : An Intertemporal Optimizing Framework. Washington, D.C. : International Monetary Fund, 1988. 1 online resource (56 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 This paper uses an intertemporal optimizing model of a small open economy to analyze how terms of trade changes affect real exchange rates and the trade balance. We consider temporary current, anticipated future, and permanent changes in the terms of trade. The results suggest that the relationship between the terms of trade and the current account (the so-called Harberger-Laursen-Metzler effect) may be quite sensitive to whether or not the model incorporates nontraded goods. Thus, the real exchange rate may be an important variable through which terms of trade shocks are transmitted to the current account. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1988/002 Full text available on IMF http://elibrary.imf.org/view/journals/001/1988/002/001.1988.issue-002-en.xml IMF e-Library