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Date: 2013-08-05

Terms of trade

In international economics and international trade, terms of trade are the ratio of the price of an export commodity(s) to the price of an import commodity(s). "Terms of trade" are sometimes used as a proxy for the relative social welfare of a country, but this heuristic is technically questionable and should be used with extreme caution. An improvement in a nation's terms of trade is good for that country in the sense that it has to pay less for the products it imports, that is, it has to give up less exports for the imports it receives.


 Other terms-of-trade calculations

1.The net barter terms of trade is the ratio (expressed as a percentage) of relative export and import prices when volume is held constant.

2.The gross barter terms of trade is the ratio (expressed as a percent) of a quantity index of exports to a quantity index of inputs.

3.The income terms of trade is the ratio (expressed as a percent) of the value of exports to the price of imports.

4.The single factorial terms of trade is the net barter terms of trade adjusted for changes in the productivity of exports.

5. The double factorial terms of trade adjusts for both the productivity of exports and the productivity of imports

 

( liyy )26 Jan,2011


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