Terms of Trade and Total Factor Productivity: Empirical evidence from Latin American emerging markets

Paul Castillo and Youel Rojas

No 2014-012, Working Papers from Banco Central de Reserva del Perú

Abstract: In this paper we use quarterly data from Chile, Mexico and Peru to study the link between terms of trade and Total Factor Productivity (TFP). We estimate TFP using a stylized general equilibrium model for a small open economy model with quarterly data. Then, the TFP is decomposed into a domestic component and one external component linked to terms of trade using a structural VAR model as in Blanchard and Quah (1989). Our main results shows that the terms of trade has indeed not only short term but also medium and long term effects on TFP, being the short and medium term impact more predominant in the sample.

Keywords: Calibration; general equilibrium; terms of trade; total factor productivity (search for similar items in EconPapers)
JEL-codes: C11 C13 C51 F41 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-eff, nep-int and nep-lam
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Citations: View citations in EconPapers (5)

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