Co-movements in terms of trade volatility in land-abundant countries

Documentos de Trabajo IAES

Universidad de Alcalá. Instituto Universitario de Análisis Económico y Social

Lugar: Alcalá de Henares; Año: 2011

1139-6148

e conjecture that extreme land abundant endowment constitutes a structural restriction driving sectoral specialization and terms of trade volatility. We estimate and compare several volatility indicators for Argentina, Australia and New Zealand in 870-2009 finding co-movements, structural breaks in variability, significant cross correlations between TOT cycles, and in some cases heteroskedasticity. If ?first nature? land-abundance is a long-term structural restriction, development policies for this type of economies must balance reductions in TOT volatility through export diversification (ay rising costs) and a combination of efficiency improvements and internal flexibility to manage volatility effects.