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

Table 3: Cycles in Government Expenditure 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 −0.07 (0.88)   0.003 (0.94)   −0.10 (0.96)   0.02 (0.97)
Terms of trade 0.02 (0.62)   −0.05 (0.00)   0.14 (0.19)   −0.03 (0.19)
GDP −0.001 (0.00)   0.002 (0.00)   0.001 (0.00)   0.003 (0.00)
1 Terms of trade 0.03 (0.69)   −0.08 (0.00)   0.17 (0.34)   −0.01 (0.77)
Terms of trade x capital flow bonanzas 0.01 (0.92)   0.02 (0.56)   −0.16 (0.54)   −0.08 (0.20)
GDP −0.001 (0.01)   0.002 (0.00)   0.001 (0.09)   0.003 (0.00)
2 Terms of trade 0.06 (0.32)   −0.11 (0.00)   0.39 (0.06)   −0.08 (0.12)
Terms of trade x terms of trade booms −0.10 (0.37)   −0.08 (0.05)   −0.44 (0.16)   0.07 (0.30)
GDP −0.001 (0.00)   0.002 (0.00)   0.001 (0.00)   0.003 (0.00)
3 Terms of trade 0.03 (0.57)   −0.01 (0.79)   0.54 (0.02)   −0.03 (0.15)
Terms of trade x flexible exchange rates −0.08 (0.69)   −0.08 (0.03)   −0.72 (0.01)   0.02 (0.43)
GDP −0.001 (0.00)   0.002 (0.00)   0.001 (0.00)   0.006 (0.00)
4 Terms of trade 0.03 (0.50)   −0.01 (0.58)   −0.02 (0.93)   −0.03 (0.34)
Terms of trade x persistent terms of trade shocks −0.08 (0.52)   −0.06 (0.05)   0.20 (0.44)   −0.01 (0.91)
GDP −0.001 (0.00)   0.002 (0.00)   1×10−4 (0.00)   0.003 (0.00)
5 Terms of trade 0.02 (0.60)   −0.01 (0.60)   −0.02 (0.91)   −0.03 (0.33)
Terms of trade x commodity-producing countries −0.03 (0.82)   −0.08 (0.01)   0.32 (0.16)   −0.03 (0.68)
GDP −0.001 (0.00)   0.002 (0.00)   0.001 (0.00)   0.003 (0.00)

Source: author's calculations