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Four Decades of Terms-of-Trade Booms :, Saving-Investment Patterns and a New Metric of Income Windfall, Gustavo Adler, Nicolas Magud

Contributor
Abstract
We study the history of terms-of-trade booms (during 1970–2012), with a focus on Latin America, through the prisms of a simple metric that quantifies the associated income windfall. We also document saving patterns during these episodes and propose a measure of how much of the income windfall was saved. We find that Latin America‘s terms-of-trade shocks of the last decade have not differed much in magnitude from those observed during the 1970s, but that the associated windfall have been substantially larger. While aggregate saving increased more than in past episodes, the share of the windfall saved (the marginal saving rate) seems to be lower, suggesting that greater aggregate saving reflects mainly the sheer size of the windfall rather than a greater 'effort' to save it. Finally, we find evidence that, while savings during the boom help to increase post-boom income, the composition of such savings matters. Specifically, in past episodes, savings allocated to foreign asset accumulation appear to have contributed more to post-boom income than those devoted to domestic investment
Table Of Contents
Cover; Abstract; Contents; I. Introduction; II. The Terms-of-Trade Windfall in Historical Perspective; Figures; 1. Key Features of Terms-of-Trade Boom Episodes, 1970-2012; 2. Emerging Latin America and Selected Regions: Terms-of-Trade Booms, 1970-2012; A. A Simple Metric of Terms-of-Trade Income Windfall; Methodology; Results; 3. Real Gross Domestic Income during Terms-of-trade Booms, 1970-2012; 4. Income Windfall of Terms-of-trade Booms, 1970-2012; 5. Emerging Latin America and Selected Regions: Income Windfall, 1970-2012; Tables; 1: Key Statistics of Income Windfall
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (33 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781484386835

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