TY  - JOUR
AU  - Gregorio,Jose De
AU  - Wolf,Holger C.
TI  - Terms of Trade, Productivity, and the Real Exchange Rate
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4807
PY  - 1994
Y2  - July 1994
UR  - http://www.nber.org/papers/w4807
L1  - http://www.nber.org/papers/w4807.pdf
N1  - Author contact info:
Jose De Gregorio
Governor
Central Bank of Chile
Agustinas 1180
Santiago, Chile
Tel: 562 6702300
E-Mail: jdegrego@bcentral.cl

Holger C. Wolf
Center for German and European Studies
ICC-503
School of Foreign Service
Georgetown University
Washington, DC  20057
Tel: 202/687-8079
Fax: 202/687-8359
E-Mail: moneyhist@aol.com
AB  - The paper examines the effects of terms of trade movements and productivity differentials across sectors on the behavior of the real exchange rate.  We develop a simple model of a small open economy producing exportable and nontradable goods and consuming importable and nontradable goods and present empirical evidence for a sample of fourteen OECD countries.  The evidence broadly supports the predictions of the model, namely that faster productivity growth in the tradable relative to the nontradable sector and an improvement in the terms of trade induce a real appreciation.
ER  -