earticle

영어

The purpose of this paper is to investigate the impact of terms of trade on real GDP and inflation. We estimate the cointegration relationship and vector error correction model including 5 variables such as real GDP, consumer price index, terms of trade, producer price index and won/dollar exchange rate. The empirical results show that terms of trade and inflation are cointegrated, but not the case for the terms of trade and real GDP. This means that when there is a positive terms of trade shock, inflation increases in the long-run. Specifically the one standard deviation shock of terms of trade results in 0.12 % increase in the consumer price index. However, the terms of trade shock can not explain the variation of real GDP in the long-run and there is no significant statistical relationship between two variables.