From 1971 to 2006, terms of trade changes had a negative and rather small effect on welfare in Iceland. For this covered period, the average yearly percentage growth of Iceland’s terms of trade was minus 0.21%. The time series diagram and the time trend line show this downward trend of Iceland’s terms of trade. The yearly average percentage change in GDP due to terms of trade was minus 0.05%. This effect is very small compared to the actual 24.34% average annual growth of Iceland's GDP (EconLit F110, F140, O470).
Inhaltsverzeichnis (Table of Contents)
- Abstract
- The Effect of Terms of Trade Changes on Welfare in Iceland
- Terms of Trade Changes
- Share of Imports in Iceland's GDP
- The Effect of Terms of Trade Changes on Welfare in Iceland
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This report analyzes the effect of changes in Iceland's terms of trade on the country's welfare from 1971 to 2006. The analysis uses data on Iceland's GDP, export unit values, and import unit values to determine the impact of terms of trade changes on GDP growth.
- The impact of terms of trade changes on welfare
- The relationship between terms of trade and GDP growth
- The role of import share in GDP in determining the effect of terms of trade changes
- The long-term trend of Iceland's terms of trade
- The significance of terms of trade changes in the context of Iceland's overall economic growth
Zusammenfassung der Kapitel (Chapter Summaries)
This report examines the effect of terms of trade changes on welfare in Iceland from 1971 to 2006. The analysis begins by defining terms of trade and their relationship to welfare. The report then utilizes data on Iceland's GDP, export unit values, and import unit values to calculate Iceland's terms of trade over the period. The report shows that Iceland's terms of trade experienced a downward trend, with an average annual decrease of 0.21%. The report then uses the import share in GDP to estimate the impact of this decline in terms of trade on GDP growth, finding that the decline in terms of trade contributed to a yearly 0.05% decline in GDP. This result is then compared to the actual 24.34% annual growth of Iceland's GDP, suggesting that the effect of terms of trade changes on welfare was relatively small.
Schlüsselwörter (Keywords)
Terms of trade, welfare, GDP, export unit values, import unit values, import share in GDP, Iceland.
- Quote paper
- Maxime Dessy (Author), 2008, The Effect of Terms of Trade Changes on Welfare in Iceland, Munich, GRIN Verlag, https://www.grin.com/document/145291
