RBA Annual Conference – 2009 Terms of Trade Shocks and Fiscal Cycles

Table 1: Cycles in Government Primary Balance and Terms of Trade
table equation
Regressions Explanatory variables Countries
High-income (OECD) Upper-middle-income Lower-middle-income Low-income
Coefficient p-value Coefficient p-value Coefficient p-value Coefficient p-value
Benchmark Constant −0.03 (0.93)   0.003 (0.87)   0.07 (0.97)   0.01 (0.99)
Terms of trade 0.06 (0.13)   0.31 (0.00)   0.16 (0.25)   0.001 (0.98)
GDP 0.01 (0.00)   −0.003 (0.00)   −0.001 (0.00)   1×10−4 (0.77)
1 Terms of trade 0.04 (0.53)   0.40 (0.00)   0.59 (0.01)   −0.02 (0.65)
Terms of trade x capital flow bonanzas −0.15 (0.10)   −0.17 (0.01)   −0.75 (0.02)   0.06 (0.46)
GDP 0.01 (0.00)   −0.003 (0.00)   −0.001 (0.00)   2×10−4 (0.76)
2 Terms of trade 0.06 (0.29)   0.44 (0.00)   0.43 (0.06)   0.04 (0.53)
Terms of trade x terms of trade booms −0.00 (0.98)   −0.23 (0.00)   −0.57 (0.14)   −0.08 (0.46)
GDP 0.01 (0.00)   −0.002 (0.00)   −0.001 (0.00)   2×10−4 (0.76)
3 Terms of trade 0.02 (0.61)   0.10 (0.03)   −0.12 (0.68)   0.02 (0.68)
Terms of trade x flexible exchange rates 0.27 (0.11)   0.20 (0.00)   0.27 (0.41)   −0.01 (0.92)
GDP 0.01 (0.00)   −0.002 (0.00)   −0.001 (0.00)   −2×10−4 (0.76)
4 Terms of trade 0.07 (0.11)   −0.01 (0.87)   0.09 (0.75)   −0.03 (0.56)
Terms of trade x persistent terms of trade shocks −0.08 (0.57)   0.48 (0.00)   0.08 (0.80)   0.06 (0.41)
GDP 0.01 (0.00)   −0.003 (0.00)   −0.001 (0.00)   1×10−4 (0.79)
5 Terms of trade 0.06 (0.12)   0.002 (0.98)   0.04 (0.86)   −0.03 (0.58)
Terms of trade x commodity-producing countries −0.05 (0.70)   0.38 (0.00)   0.18 (0.53)   0.10 (0.27)
GDP 0.01 (0.00)   −0.003 (0.00)   −0.001 (0.00)   2×10−4 (0.78)

Source: author's calculations