Economic activity and the terms of trade. Argentina, a case study.

Salta

Congreso; L Reunión Anual de la Asociación Argentina de Economía Política; 2015

Universidad Nacional de Salta y Asociación Argentina de Economía Política

We address the influence of terms of trade (TOT) on GDP in Argentina using an 1810-2014 annual database. Eighteen multivariate VAR econometric models are estimated under diverse hypotheses for the relationship among economic activity, TOT, and a few control variables. We find for this particular case weak empirical evidence of a positive relationship between TOT and GDP levels; some evidence of a negative TOT volatility-GDP level relationship; and some evidence on the existence of a positive link between TOT growth volatility and GDP growth volatility. In general the relationships have the expected signs but are not statistically significant.