Research Discussion Paper – RDP 9508 Are Terms of Trade Rises Inflationary?

Contents

• Introduction
• Stylised Facts
• A Model
• Estimating the Impact of Terms of Trade Shocks on Inflation
• Discussion and Conclusions
• Appendix 1: Data
• Appendix 2: Derivation of Equation (7) in the Text
• Appendix 3: The Income Effect
• References

The paper has benefited from helpful comments by Palle Andersen, Alex Heath, Ricky Lam, Philip Lowe, Warwick McKibbin, Gordon Menzies and Chris Ryan. We are especially grateful to Mark Rider for his contribution to the early stages of the project. Any errors are ours alone. The views expressed are those of the authors and do not necessarily reflect those of the Reserve Bank of Australia.