National Saving and Terms-of-Trade: The Harberger-Laursen-Metzler Effect Revisited

Abstract

This paper provides new evidence relating to the debate of whether long-lived TOT shocks affect saving rates using a sample of 56 developing countries for the period 1980-2010. The core aspect of the empirical analysis is to utilize the terms-of-trade (TOT) shock-duration and trend-growth measures that have not been considered in the previous empirical literature.