The paper examines the effect of terms-of-trade changes on a small country's spending and current account, assuming optimizing behavior in an intertemporal framework with perfect international capital mobility. A temporary (future) terms-of-trade deterioration implies a deterioration (improvement) of the trade balance, whereas a permanent terms-of-trade deterioration has an ambiguous effect, depending on the rate of time preference. Nominal and real variables are considered via exact price indexes. Two periods and an infinite horizon are examined.

The paper examines the effect of terms-of-trade changes on a small country's spending and current account, assuming optimizing behavior in an intertemporal framework with perfect international capital mobility. A temporary (future) terms-of-trade deterioration implies a deterioration (improvement) of the trade balance, whereas a permanent terms-of-trade deterioration has an ambiguous effect, depending on the rate of time preference. Nominal and real variables are considered via exact price indexes. Two periods and an infinite horizon are examined.

Elhanan Helpman, Assaf Razin; Uncertainty and International Trade in the Presence of Stock Markets, The Review of Economic Studies, Volume 45, Issue 2, 1 June 1

Journal Article Welfare Aspects of International Trade in Goods and Securities: An Addendum Get access Elhanan Helpman, Elhanan Helpman Tel-Aviv University Search for other works by this author on: Oxford Academic Google Scholar Assaf Razin Assaf Razin Tel-Aviv University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 94, Issue 3, May 1980, Pages 615–618, https://doi.org/10.2307/1884588 Published: 01 May 1980

I. Introduction, 489.—II. The model, 490.—III. A diagrammatical exposition of stock market equilibrium and the balance of payments, 495.—IV. Gains from trade, 499.—V. Commodity trade taxes and welfare losses, 501.

M OST of the problems of measurements of productivity are related in one way or another to problems of aggregation. This statement also covers the measurement of technical change. There are few, if any, conceptual problems in measuring a production process which consists of a single factor and a single product. As soon as more factors or more products are included, complications arise. Some of these are examined in this paper. In the absence of technical change (TC) the main finding is our claim that the well-known concept of index number bias has no empirical validity and is therefore irrelevant in answering some of the questions it has been supposed to answer. In introducing TC, a natural definition of neutral TC (NTC) is suggested so that changes in output can be allocated to NTC, differential TC (DTC), and changes in inputs. It is shown how in general DTC is measured as NTC. An important role in our discussion is played by aggregates derived from the underlying production function. To illustrate the use of such aggregates a multiproduct production function is partly estimated. We start this paper by presenting the empirical production function which serves as illustration in subsequent discussion. In section III we take up the question of index number bias. In section IV we define the two forms of technical change and deal with the effects of NTC and changes in inputs on output. In section V the measurement of DTC is discussed.

We study the full equilibrium dynamics of a two-country world economy with a floating exchange rate, traded and nontraded goods, and explicit modeling of the use of money. The resulting exchange rate equation depends on several details of the economic structure, such as the supply structure and propensities to spend on various goods. Although real exchange rate movements have the usual association with the current account, the ordinary exchange rate may appreciate or depreciate when there are deficits on current account even when the quantities of money do not change. Deviations from purchasing-power parity and the Fisher equation are shown to be the rule rather than the exception.

We examine the protective effect of a tariff in a small economy with uncertainty and a stock market in which shares of firms are traded. In a deterministic economy, the allocation of resources is governed by commodity prices; in our economy, it is governed by equity prices and is dependent on commodity prices only to the extent that they influence equity prices. We show that in the absence of international trade in securities a tariff need not protect the import competing sector. In the presence of international trade in securities, a tariff always protects the import competing sector.