This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Declining terms of trade Worsening terms of trade means that the price ratio is going against you if terms of trade are improving, the ratio/differential is working for you Reasons for the secular decline in terms of trade? Unequal terms of trade Can create price rather than take price Strong labor in the core: cost reductions from increased productivity can be translated into either price reductions or wage increases; in core countries, unemployment is low and labor unions are stronger Weak labor in the periphery Income Elasticity of Demand...
View Full Document
This note was uploaded on 09/27/2011 for the course INTL 3300 taught by Professor Mitchell during the Fall '08 term at University of Georgia Athens.
- Fall '08