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Terms of Trade Instability and Output Growth in Bolivia
- The Journal of Developing Areas
- Tennessee State University College of Business
- Volume 48, Number 2, Spring 2014
- pp. 275-286
- 10.1353/jda.2014.0034
- Article
- Additional Information
This study examines the empirical hypothesis that there is a negative relationship between terms of trade instability and output growth. The instability in the terms of trade is measured by the price variance of three export commodities for Bolivia. Results confirm the hypothesis that terms of trade instability and output growth have an inverse relationship. Since the terms of trade affect the value of tradable components of output, fluctuations in the terms of trade caused by exports price instability are likely to lead to fluctuations in output.