Standard vs. Expectations-Based Indices of TOT and GDP volatility. Five land-abundant countries: Argentina, Australia, Canada, New Zealand, and Uruguay.

Valencia

Congreso; Arnoldshain Seminar XII - Globalizaation, Development and Human Capital.; 2014

Universidad de Valencia

Our purpose is to improve upon a standing ambiguity in the meaning of ?volatility?, building indicators that possess desirable properties: they reflect unobserved ex ante uncertainty, make reference to a time process, and use the admissible data set for economic agents. We spell out the characteristics of old and new approaches, and estimate TOT volatility evolutions for selected land-abundant countries using our own forward-looking estimation based on forecasting errors. We argue that this estimation is free from some methodological weaknesses of other methods. A check on the robustness of methods reveals that different definitions provide non-coincident patterns of volatility.Keywords: Terms of trade; volatility; land abundance; Argentina; Australia; Canada; NewZealand; Uruguay.JEL Classification: F10, F13, F14.