Impact of export fluctuations on income-a cross country analysis
Abstract
The degree of export fluctuation and its impact
on income have been the subject of a number of
investigations. A major bone of contention has been
whether developing countries experience a greater
degree of fluctuation in exports than developed
countries and whether such fluctuations affect the
growth rate of developing countries. In this paper
we address ourselves to the second issue - the im
pact of export fluctuations, particularly on the in
come of the developing countries. For this purpose
we construct comparable econometric models for a
number of countries - mostly developing but some
developed - and derive from these models the ex
port-income multiplier that can throw light on the
question of which countries are affected more by
export fluctuations. We find that the procedure of
using cross country regressions adopted by a num
ber of writers for studying this issue is defective.
In section I we outline the theoretical model em
ployed and develop the method used for bringing
out the impact on income of changes in exports. In
section II we present the econometric models esti
mated and the findings that emerge from them.
Section III gives our conclusions.
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