You are on page 1of 113

Board of Governors of the Federal Reserve System

International Finance Discussion Papers

Number 609

April 1998

Trade Elasticities for G-7 Countries

Peter Hooper, Karen Johnson, and Jaime Marquez

Note: International Finance Discussion Papers are preliminary materials circulated to stimulate
discussion and critical comment. References in publications to International Finance Discussion
Papers (other than acknowledgment that the writer has had access to unpublished material) should
be clear with the author or authors. Recent IFDPs are available on the Web at www.bog.frb.fed.us
Trade Elasticities for G-7 Countries

Peter Hooper, Karen Johnson, and Jaime Marquez*

Division of International Finance
Board of Governors of the Federal Reserve System
Washington, DC 20551

April 1998

Abstract: This paper reports the results of a project to estimate and test the stability properties of
conventional equations relating real imports and exports of goods and services for the G-7
countries to their incomes and relative prices. We begin by estimating cointegration vectors and the
error-correction formulations. We then test the stability of these equations using Chow and
Kalman-Filter tests. The evidence suggests three findings. First, conventional trade equations and
elasticities are stable enough, in most cases, to perform adequately in forecasting and policy
simulations. Equations for German trade, as well as equations for French and Italian exports are an
exception. Second, income elasticities of U.S. trade have not been shifting in a direction that will
tend to ease the trend toward deterioration in the U.S. trade position. The income-elasticity gap for
Japan found in earlier studies was not confirmed in this analysis. Finally, the price channel is
weak, if not wholly ineffective, in the case of continental European countries.

Keywords: Exports, imports, elasticities, cointegration, error-correction modeling, G-7 countries

* Hooper and Johnson are associate directors and Marquez is a senior economist, all three from the
Division of International Finance at the Federal Reserve Board. We wish to thank Ted Truman
and Ralph Tryon for their comments on an earlier draft and Aaron Kechley and Molly Wetzel for
their research assistance. The calculations in this paper use PcGive Professional 9.0. The views in
this paper are solely the responsibility of the authors and should not be interpreted as reflecting the
views of the Board of Governors of the Federal Reserve System or of any other person associated
with the Federal Reserve System.
 W?|hL_U|L? @?_ 544@h)
At T@Tih hiTLh|t |i hit*|t Lu @ ThLiU| |L it|4@|i @?_ |it| |i t|@M*|) ThLTih|it
Lu UL?i?|L?@* i^@|L?t hi*@|?} hi@* 4TLh|t @?_ i TLh|t Lu |i B. UL?|hit |L
|ih ?UL4it @?_ hi*@|i ThUit h Th4@h) }L@* t |L @?@*)3i |i i |i?| |L U 
t|LhU@* i Tihi?Uic @t ?ULhTLh@|i_ ? |iti it|4@|i_ i^@|L?tc U@? Mi ti_ @t @
hi*@M*i }_i |L u|hi |hi?_t ? hi@* |h@_i Lt ,_i?Ui Lu ?t|@M*|) ? it|4@|i_
T@h@4i|iht 4@) Mi ?_U@|i Lu U@?}it ? 4Lhi u?_@4i?|@* u@U|Lht @giU|?} }*LM@*
|h@_i @?_ ThL_U|L?c @h)?} 4i@thi4i?| ihhLhc L4||i_ @h@M*itc @?_ L|ih uLh4t
Lu i^@|L? 4ttTiU€U@|L?
h @?@*)tt uL**Lt T@h|*) ? |i |h@_|L? Lu OL|@!!ih @?_ @}ii EbSbc L
TL?|i_ L| |@| u @ UL?|h)<t ?UL4i i*@t|U|it Lu 4TLh|t @?_ i TLh|t _gih t}?u 
U@?|*)c @?_ u |@| _gihi?Ui Tihtt|t ? |i u@Ui Lu UL?ih}?} ?UL4i }hL| h@|it
@UhLtt UL?|hitc |i? |i UL?|h) ** i Tihi?Ui @ }hL?} |h@_i 4M@*@?Uic Ui|iht
T@hMt , t|?} it|4@|it Lu ?UL4i i*@t|U|it Lu 4TLh|t @?_ i TLh|t t}}it| |@|
@| Uhhi?| |hi?_ h@|it Lu N5 @?_ uLhi}? B# }hL|c i|ih |i N5 i |ih?@* 4
M@*@?Ui ** _i? ?_i€?|i*) Lh hi*@|i ThUit ** @i |L @_t| Lih |4i |L !iiT 
| uhL4 _L?} tL OLiihc @hi |i i t|?} it|4@|it hi*@M*i i?L} |L Mi |hi@|i_ @t
UL?t|@?|tq Wu ?L|c |i? tU Thi_U|L?t @hi ?@hh@?|i_ h @?@*)tt @*tL uL**Lt ?
|i |h@_|L? Lu |i *|ih@|hi L? |i ThUi Ri*@t|U|) Titt4t4 Lu |i i@h*) bDftc 
i? @?@*)t|t L?_ihi_ i|ih |h@_i Lt ihi ThUi i*@t|U i?L} uLh i U@?}i
h@|i U@?}it |L i?}i?_ih _ithi_ @_t|4i?|t Lu i |ih?@* M@*@?Uit
`i Mi}? M) it|4@|?} UL?i?|L?@* |h@_i i^@|L?t uLh hi@* 4TLh|t @?_ i TLh|t
Lu }LL_t @?_ tihUit Lu |i B. UL?|hit t?} UL?|i}h@|L? @?_ ihhLhULhhiU|L?
it|4@|L? |iU?^it `i |i? |it| |i t|@M*|) Lu |iti i^@|L?t t?} @ @hi|) Lu 
L |it|t 6?@**)c i |it| |i t|@M*|) Lu |i ?__@* ?UL4i @?_ ThUi i*@t|U|it 
? @ t4T*€i_ ihtL? Lu |i UL?i?|L?@* i^@|L?t t?} k@*4@? €*|ih it|4@|L?
|iU?^it h !i) €?_?}t | hitTiU| |L i^@|L? @?_ T@h@4i|ih t|@M*|) @hiG

 @ti_ L? |i L |it|t uLh Lih@** i^@|L? t|@M*|)c i _L ?L| €?_ i_i?Ui Lu
ThL?L?Ui_ Lh UhL?U ?t|@M*|) Lu i*@t|U|it _h?} |i bbft uLh |i 4@Lh|)
Lu uLh4*@|L?t h hit*|t UL?|h@t| | tiih@* i@h*ih t|_it |@| uL?_
t}?€U@?| i_i?Ui Lu ?t|@M*|) ? N5 @?_ a@T@?iti |h@_i i^@|L?t _h?}
|i b.ft @?_ bHft

2 `i €?_ @ ui i UiT|L?t |L |t T@||ih? Lu t|@M*|)c Liih ,^@|L?t uLh
Bih4@? |h@_ic @t i** @t i^@|L?t uLh 6hi?U @?_ W|@*@? i TLh|tc tL tM
t|@?|@* T@h@4i|ih ?t|@M*|) @hL?_ |i |4i Lu Bih4@? hi?€U@|L? At
?t|@M*|) t UL?€h4i_ M) it|4@|it Lu t|@|U uLh4*@|L?t M@ti_ L? |i k@*4@?
6*|ih |iU?^i

h €?_?}t @ML| |i 4@}?|_it Lu i*@t|U|) it|4@|it @hi @*tL Lu ?|ihit|G


 Ai }@T Mi|ii? |i ?UL4i i*@t|U|it Lu N5 4TLh|t @?_ i TLh|t ThLi_
^|i hLMt| Ai ?UL4ii*@t|U|) }@Tt uLh a@T@?c 6h@?Uic W|@*)c @?_ Bih4@?)
@TTi@h |L Mi ^|i t4@**c | i*@t|U|) *ii*t uLh ML| 4TLh|t @?_ i TLh|t
}i?ih@**) Ui?|ihi_ @hL?_ D uLh |i ,hLTi@? UL?|hit @?_ @ M| *Lih uLh
a@T@? At hit*| uLh a@T@? t ^|i _gihi?| uhL4 tL4i t|_itc U uL?_
|i ?UL4i i*@t|U|) Lu i TLh|t |L Mi i** ? i Uitt Lu |@| uLh 4TLh|t

2 ,t|4@|i_ i*@t|U|it uLh |i i TLh| i^@|L?t @hi *itt hi*@M*i |@? |Lti Lu
4TLh|t Ai UL?t|hU|L? Lu _@|@ uLh uLhi}? ThUit @?_ ?UL4ic ti_ ? |i
i TLh| i^@|L?tc hit|t L? @tt4T|L?t |@| 4}| ?|hL_Ui @}}hi}@|L? M@tit

 @?@_@?c a@T@?itic Nkc @?_ N5 |h@_i Lt @TTi@h |L Mi UL?t_ih@M*) 4Lhi
ThUi hitTL?ti |@? |Lti ? UL?|?i?|@* ,hLTi W?_ii_c |i it|4@|i_ *L?}
h? ThUi i*@t|U|it Lu 4TLh|t @?_ i TLh|t uLh Bih4@?) @?_ 6h@?Ui ihi uL?_
thTht?}*) *L E? @MtL*|i @*i *itt |@? fD ? @** U@tit @?_ L?|*) ?tu
€Ui?| |L 4ii| |i @ht@**wih?ih UL?_|L? hi^hi_ uLh tUUittu* i |ih?@*
@_t|4i?| @ |i i U@?}i h@|i U@??i*

W? *}| Lu |iti €?_?}tc i _h@ |i uL**L?} 4T*U@|L?tG

 L?i?|L?@* |h@_i i^@|L?t @?_ i*@t|U|it @hi t|@M*i i?L}c ? 4Lt| U@titc
|L TihuLh4 @_i^@|i*) ? uLhiU@t|?} @?_ TL*U) t4*@|L?t ,^@|L?t uLh Bih
4@? |h@_ic @t i** @t i^@|L?t uLh 6hi?U @?_ W|@*@? i TLh|t @hi @? i UiT|L?

2 W?UL4i i*@t|U|it Lu N5 |h@_i @i ?L| Mii? tu|?} ? @ _hiU|L? |@| **
|i?_ |L i@ti |i |hi?_ |L@h_ _i|ihLh@|L? ? |i N5 |h@_i TLt|L? Ai
?UL4ii*@t|U|) }@T uLh a@T@? uL?_ ? i@h*ih t|_it @t ?L| UL?€h4i_ ?
|t @?@*)tt

 h i*@t|U|) it|4@|it t}}it| |@| |i ThUi U@??i* t i@!c u ?L| L**)
?igiU|ic ? |i U@ti Lu UL?|?i?|@* ,hLTi@? UL?|hitc @*|L} |t hit*|
UL*_ @*tL hiiU| |i TiU*@h|it Lu ?|h@,hLTi@? |h@_i

2 hiLt ,4ThU@* `Lh! 
tMt|@?|@* i4ThU@* *|ih@|hi i t|t L? |i it|4@|L? Lu ?UL4i @?_ ThUi i*@t
|U|it ? ?|ih?@|L?@* |h@_ic 4U Lu | uLUtti_ L? N5 |h@_i BL*_t|i? @?_ k@?
EbHD thi) i4ThU@* it|4@|it Lu *L?}h? ?UL4i @?_ ThUi i*@t|U|it uLh 4TLh|t
@?_ i TLh|t Lu 4@Lh ?_t|h@* UL?|hit( OLLTih @?_ @h^i3 EbbD @*tL thi)
Lu ThUi i*@t|U|it uLh |h@_i ? |i N?|i_ 5|@|itc a@T@?c @?_ Bih4@?)c *i @h

2
^i3 EbbH thi)t it|4@|it Lu ?UL4i @?_ ThUi i*@t|U|it uLh N5c a@T@?itic @?_ 
@?@_@? 4TLh|t
@h|  tLt it|4@|it Lu ?UL4i @?_ ThUi i*@t|U|it uLh |L|@* 4ihU@?_ti i 
TLh|t @?_ 4TLh|t uLh B. UL?|hit uhL4 |hii hiThiti?|@|i t|_itG *?i EbHbc
OL|@!!ih @?_ @}ii EbSbc @?_ @h^i3 Ebbf Aiti it|4@|it @hi M@ti_ L?
ThibH. _@|@ @?_ @tt4i |@| |i i*@t|U|it @hi UL?t|@?| Lih |i t@4T*i t|_i_
,t|4@|it uLh |i N?|i_ 5|@|it tL ?UL4i i*@t|U|it uLh 4TLh|t Ui?|ihi_ @hL?_
2f @?_ UL?tt|i?|*) }ih |@? i*@t|U|it uLh i TLh|t ,t|4@|it Lu |i ?UL4i i*@t
|U|it uLh a@T@?iti |h@_i @i @? @t)44i|h) ? |i LTTLt|i _hiU|L?G |i ?UL4i
i*@t|U|) uLh i TLh|t i Uii_t |@| Lu 4TLh|t M) @ tMt|@?|@* 4@h}? ,t|4@|i_
ThUi i*@t|U|itc tL? ? |i t@_i_ @hi@t Lu |i U@h|c @hi t4@**ihc ? @MtL*|i 
@*ic |@? |i ?UL4i i*@t|U|it itTiU@**) uLh tiih@* ,hLTi@? UL?|hit @?_ @hi
*itt |@? L?i OLLTih @?_ @h^i3<t thi) ?_U@|it |@| ThUi i*@t|U|it u@** ?
@ h@?}i Lu  |L Dc L? @ih@}ic uLh N5 @?_ a@T@?iti | ,hLTi@? |h@_i tL 
?} UL?t_ih@M*) *itt ThUi hitTL?ti?itt( BL*_t|i? @?_ k@? hiTLh| }ih ThUi
i*@t|U|it uLh Bih4@? 4TLh|t M@ti_ L? _@|@ |hL} |i i@h*) b.ft
Aihi @t Mii? tL4i *4|i_ hiti@hU L? |i ^it|L? Lu T@h@4i|ih t|@M*|) ? 
?|ih?@|L?@* |h@_i i^@|L?tc | 4Lt| Lu |i Lh! uLUtt?} L? N5 4TLh| i^@
|L?t OLLTih Eb.Hc 5|ih? i| @* Eb.b t?} hL**?}hi}hittL? |iU?^itc @?_
#i)@!c 5@)ihc @?_ 5Th?!*i EbHb @?_ ~i|3 @?_ i4Mih|L? Ebb c ML| t?}
tT*|t@4T*i it|4@|L? |iU?^it EL |it|tc uL?_ i_i?Ui Lu t}?€U@?| T@
h@4i|ih ?t|@M*|) ? |i N5 4TLh| i^@|L? _h?} |i b.ft @?_%Lh bHft( tii
@*tL @t!t EbH  Aiti t|_it uL?_ tL4i i_i?Ui Lu @? T@h_ _hu| ? |i 
?UL4i i*@t|U|) Lu 4TLh|tc M| ?L| UL?tt|i?|*) tL @UhLtt @** Lu |iti t|_it Lhi
Lu|i? |@? ?L|c @? ?Uhi@ti ? |i ?UL4i i*@t|U|) |i?_i_ |L }L @?_ ? @?_ |
@ _iUhi@ti ? |i ThUi i*@t|U|)c @?_ Ui iht@ OLLTih Eb.H @*tL UL?t_ihi_ N5
i TLh|t @?_ uL?_ i*@t|U|) it|4@|it |L Mi 4U 4Lhi t|@M*i |@? |Lti uLh 4TLh|t
_h?} |i bSft @?_ b.ft i}*Lt! Ebb. ?it|}@|i_ |i t|@M*|) Lu a@T@?iti 
4TLh| @?_ i TLh| i^@|L?t t?} ML| L |it|t @?_ hiUhti it|4@|L? |iU
?^it @?_ uL?_ t}?€U@?| i_i?Ui Lu ?t|@M*|) ? ML| _h?} |i 4_bHft

,t|4@|L?G L_i*c #@|@c @?_ +it*|t 
 L_i*
Ai 4L_i* i ti t |i UL?i?|L?@* |hi@|4i?| Lu |h@_i Lt @t @ u?U|L? Lu hi@* 
?UL4it @?_ hi*@|i ThUit Ai 4L_i* @tt4it |@| ThUi L4L}i?i|) L*_t @?_
|@| |i i*@t|U|it Lu 4TLh|t @?_ i TLh|t | hitTiU| |L ?UL4i @?_ hi*@|i ThUit
4 Iru
dq hduolhu uhylhz/ vhh Vwhuq hw do1 +4<:9,> iru d uhylhz irfxvlqj rq X1V1 hodvwlflwlhv vhh Vdz|hu
dqg Vsulqnoh +4<<9,1


Chart 1

Estimated Income and Price Elasticities for Trade: Selected Studies

United States Japan
4 4
Income Price
Export
Import
3 Elasticity Elasticity 3
2 2
1 1
H C M H C M
0 0
H C M H C M
-1 -1
-2 -2
-3 -3
H = Houthakker-Magee 1969 C = Cline 1989
M = Marquez 1990

United Kingdom Canada
4 4
3 3
2 2

1 1
H C M H C M
0 0
H C M H C M
-1 -1

-2 -2
-3 -3

Germany France
4 4
3 3
2 H 2

1 1
C M H C M*
0 0
H C M H C M*
-1 -1
-2 -2
-3 -3

Italy
4 4
3 3 Income elasticities are greater than one
2 2
Asymmetry in income elasticities for
1 1 Japan and the United States
H C M*
0 0
H C M*
-1 -1
European price elasticities are less than
one in absolute value
-2 -2
-3 -3
* Not included in study
@hi UL?t|@?| Lih |4i wi||?} *LihU@ti *i||iht _i?L|i *L}@h|4U @*itc i 4L_i*
UL?|h)  t hi@* 4TLh|t Lu }LL_t @?_ tihUit E6  ? |ih4t |t hi@* B# E+  @?_ |i


hi*@|i ThUi Lu 4TLh|t EoR6 ( hi@* i TLh|t Lu }LL_t @?_ tihUit E%  @hi _i|ih4?i_
M) uLhi}? ?UL4i Es +  @?_ |i hi*@|i ThUi Lu i TLh|t EoR% 
6Lh it|4@|L?c Lh 4L_i* UL?tt|t Lu t)t|i4t Lu i^@|L?t uLh hi@* 4TLh|t @?_
i TLh|t uLh i@U Lu |i B. UL?|hit @t i** @t |ih hi@* B#t @?_ hi*@|i ThUit
Aiti t)t|i4t @hi |i? ti_ |L LM|@? UL?|i}h@|?} iU|Lht ELh *L?}h? hi*@|L?
tTt uLh hi@* 4TLh|t @?_ i TLh|t
Ai 4TLh| t)t|i4 t
?
[ ?
[ ?
[
6c| ' k 6c|  n
3  +c|  n
3 b oR6c|  n 0c|
3 E
 '  '  '
?
[ ?
[ ?
[
+c| '  6c|  n
3 v +c|  n
3  oR6c|  n lc|
3 E2
 '  '  '
?
[ ?
[ ?
[
oR6c| ' w 6c|  n
3 D +c|  n
3  oR6c|  n )c|
3 E 
 '  '  '
ihi E0c| lc| )c|  Efc \6 

Ai i TLh| t)t|i4 t
?
[ ?
[ ?
[
%c| ' B %c|  n
3 V s+c|  n
3 1 oR%c|  n >c|
3 Ee
 '  '  '
?
[ ?
[ ?
[
s +c| ' 4 %c|  n
3 # s +c|  n
3  oR%c|  n jc|
3 ED
 '  '  '
?
[ ?
[ ?
[
oR%c| ' / %c|  n
3  s +c|  n
3  oR%c|  n "c|
3 ES
 '  '  ' 
ihi E>c| jc| "c|  Efc \% 
+iUL}?3?} |@| |i _)?@4U @_t|4i?| |L @hLt tLU!t U@? _gih t}?€U@?|*)
Mi|ii? 4TLh|t @?_ i TLh|t @?_ @UhLtt UL?|hitc i @*tL tTiUu) ihhLhULhhiU|L?
i^@|L?t Aiti i^@|L?t UL?t|h@? |i *L?}h? i*@t|U|it |L Mi |i UL?|i}h@|?} 
iU|Lh @?_ @**L uLh @ 4Lhi UL4T*i|i tTiU€U@|L? Lu tLh||ih4 ?UL4i @?_ ThUi
i*@t|U|it 6Lh i TLh|tc |i uLh4*@|L? t

[ [ [
{%| ' k {%c|  n
3  {s +c|  n
3 4 {oR%c|  n l .%c|  c
3 3 E.

e 
ihi .% t |i _gihi?Ui Mi|ii? @U|@* i TLh|t @?_ |ih *L?}h? @*i @t
Thi_U|i_ M) |i UL?|i}h@|?} hi*@|L?tT @4L?} % c s + c @?_ oR% uhL4 EeES
@MLi Ai RihhLhULhhiU|L? ULiUi?| l ?_U@|it |i ThLTLh|L? Lu .% |@| 
t U*Lti_ ? |i Uhhi?| TihL_ 6Lh 4TLh|tc |i uLh4*@|L? t

[ [ [
{6| ' y {6c|  n
3 q {+c|  n
3 Z {oR6c|  n x .6c|  c
3 3 EH 

ihi .6 t |i _gihi?Ui Mi|ii? @U|@* 4TLh|t @?_ |ih *L?}h? @*i @t
Thi_U|i_ M) |i UL?|i}h@|?} hi*@|L?tT @4L?} 6 c + c @?_ oR6 uhL4 EE  Ai
RihhLhULhhiU|L? ULiUi?|c x c ?_U@|it |i ThLTLh|L? Lu .6 |@| t U*Lti_ 
? |i Uhhi?| TihL_ 

2 #@|@
"@h|ih*) _@|@ L? hi@* 4TLh|t @?_ i TLh|t Lu }LL_t @?_ tihUitc B#tc @?_ |i
UL4TL?i?|t Lu hi*@|i ThUit uLh i@U Lu |i B. UL?|hit ihi LM|@?i_ uhL4 ?@|L?@*
@UUL?|t t|@|t|Ut TTi?_Uit ,k tL |i iL*|L? uLh 4TLh|tc i TLh|tc _L4it|U
B#c uLhi}? B#c @?_ hi*@|i ThUit uLh |h@_i ? i@U UL?|h)
@h| 2 tLt |@| ? @** Lu |i B. UL?|hitc hi@* i TLh|t @?_ hi@* 4TLh|t @i
hti? @t @ t@hi Lu hi@* B# Lih |i T@t| |hii |L uLh _iU@_it Aiti t@hit @hi
Uhhi?|*) *@h}it| ? @?@_@c @ hit*| Lu |i t3i@M*i ?Uhi@ti ? |iti h@|Lt ? |@|
UL?|h) t?Ui |i bSft #gihi?Uit ? |h@_i L|UL4it @hi hiiU|i_ ? |i T@|t Lu
Uhhi?|@UUL?| M@*@?Uit hi*@|i |L B# t t U*i@h uhL4 @h| c Lih |i T@t|
|i?|) )i@htc i |ih?@* 4M@*@?Uit uLh tL4i Lu |i B. UL?|hit @i _i?i_ Lih
u@h*) *L?} ?|ih@*t |L hi@U t}?€U@?| t3i 6Lh |i N?|i_ 5|@|itc |i |i?_i?U)
|L@h_ *@h}ih Uhhi?| @UUL?| _i€U|t @t ?|ihhT|i_ ? |i *@|i bHft @?@_@ @?_
|i N?|i_ k?}_L4 @i t4*@h*) tL? iTtL_it Lu _i??} _i€U|t 6Lh a@T@?c
|i Uhhi?| @UUL?| thT*t @t @ t@hi Lu B# hi@Ui_ @ Ti@! ? |i 4_bHftc M|
|i thT*t hi4@?t t3i@M*i Ai Bih4@? thT*t @t @| *i@t| |i4TLh@h*) i*4?@|i_
M) |i igiU|t Lu ?€U@|L?
W_i@**)c ThUi _@|@ tL*_ E @i |i t@4i ThL_U| ULih@}i @t |i @}}hi}@|i
4i@thi Lu |h@_i Mi?} t|_i_ @?_ E2 Mi UL?tt|i?| | |i it|4@|L? 4L_i* 6Lh 
4TLh|tc Lh it|4@|it hit| L? |i UL?i?|L?@* h@|L Lu 4TLh| ThUitc   c |L |i
_L4it|U B# _i@|Lhc  t G
 
oR6 ' *L}E 
 t 
hL_U| ULih@}i uLh |t 4i@thi ULhhitTL?_t |L |i 4i@thi Lu |h@_i Mi?} t|_i_
@?_c M) @**L?} |i t@hi Lu 4TLh|t ? B# |L U@?}i Lih |4ic oR6 ?ULhTLh@|it
U@?}it ? |i UL?|h)<t LTi??itt |L |h@_i | |i t@4i |4ic oR6 4}| ?U*_i
ThL_U|t |@| @hi ?L| UL?tt|i?| | |i 4TihuiU| tMt|||i 4L_i* ti_ ihi 6Lh

D
Chart 2

Real Exports and Imports Relative to GDP

United States
Percent
15

Imports
10

Exports 5

0
1960 1970 1980 1990 2000

Japan Germany
Percent Percent
15 35

30
10
25

20
5
15

0 10
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000

France Italy
Percent Percent
35 30

30
25
25
20
20
15
15

10 10
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000

United Kingdom Canada
Percent Percent
35 40

30
30
25
20
20
10
15

10 0
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000
Chart 3

Current Account Balance Relative to GDP

United States
Percent
4

2

0

-2

-4

-6
1960 1970 1980 1990 2000

Japan Germany
Percent Percent
6 6

4 4

2 2

0 0

-2 -2

-4 -4
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000

France Italy
Percent Percent
6 5

4 3

2 1

0 -1

-2 -3

-4 -5
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000

United Kingdom Canada
Percent Percent
4 4

2 2

0 0

-2 -2

-4 -4

-6 -6
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000

Source: OECD database, dowloaded from OLIS
i @4T*ic oR6r ?U*_it |i ThUi Lu L* 4TLh|t( |iti 4TLh|t @hi @ TihuiU| tMt|||i
uLh _L4it|U L* U t ThL_Ui_ @M?_@?|*) ? |i N?|i_ 5|@|it
6Lh i TLh|tc i ti |i i TLh| ThUic  f c hi*@|i |L |i uLhi}? B# _i@|Lhc 
t 8 G
 f  .m*
oR% ' *L}E c
 t 8 
ihi .m* t ThUi Lu |i | uLhi}? Uhhi?U) ? |ih4t Lu N5mc i Thitti_ @t @? 
?_i  Ai ?4ih@|Lh Lu oR% t |i i TLh| ThUi Lu |i | UL?|h) i Thitti_ ?
N5m( |i _i?L4?@|Lh Lu oR% t |i uLhi}? B# _i@|Lhc uhL4 |i t|@?_TL?| Lu |i 
| UL?|h)c @*tL i Thitti_ ? N5m( @}@?c ThL_U| ULih@}i uLh oR% UL?U_it |
|i 4i@thi Lu |h@_i Mi?} t|_i_ OLiihc oR% _Lit ?L| u**) hiiU| U@?}it ?
LTi??itt MiU@ti |i i}|t ti_ |L UL?t|hU| |i uLhi}? B# _i@|Lh @hi € i_
M) @tt4T|L?
W?_ii_c _@|@ uLh uLhi}? @}}hi}@|it uLh |i | UL?|h) @hi UL?t|hU|i_ @t }iL4i|hU
@ih@}it @UhLtt @** UL?|hit  E?L| ?U*_?}  t?} <t t@hi ? <t i TLh|t @t i}|t
6Lh i @4T*ic _@|@ uLh |i uLhi}? B# _i@|Lh uhL4 |i t|@?_TL?| Lu UL?|h)  @hi
U@*U*@|i_ @t
\  t [
 t 8 ' E / c / ' c
 '
. m*  '


ihi / t |i t@hi Lu UL?|h)  ? <t ?L4?@* i TLh|t Aiti i TLh| t@hit UL4i
uhL4 |i W6<t #hiU|L? Lu Ah@_i 5|@|t|Ut uLh bbD Etii @TTi?_  }@?c |i
t@hit ti_ ? i}|?} |i UL4TL?i?|t Lu |iti @}}hi}@|it @hi € i_ M) @tt4T|L?
@?_ |t _L ?L| u**) hiiU| U@?}it ? |i UL?|h) UL4TLt|L? Lu Lh*_ |h@_i #@|@
L? hi@* B#tc B# _i@|Lhtc @?_ ?L4?@* i U@?}i h@|it uLh |i ?L?B. UL?|hit 
ihi LM|@?i_ uhL4 ?@|L?@* tLhUit AL t|_) |i ti?t||) Lu |i hit*|tc |i
@TTi?_Uit ,k hiTLh| @*|ih?@|i tTiU€U@|L?t Lu |i 4TLh| @?_ i TLh| i^@|L?t 
? U i tMt|||i uLh |i hi*@|i ThUi |ih4t _i€?i_ @MLi |i W6<t hi@*
igiU|i i U@?}i h@|i TTi?_  _LU4i?|t _i|@*t L? |i W6<t hi@* igiU|i
i U@?}i h@|it
Ai Mi}???} TL?| Lu |i t@4T*i TihL_ Lih U |i i^@|L?t ihi it|4@|i_ 
@hi_ _iTi?_?} L? |i @@*@M*|) Lu _@|@ M) UL?|h)G |i 4_bDft |L i@h*) bSft
uLh @?@_@c a@T@?c |i N?|i_ k?}_L4c @?_ |i N?|i_ 5|@|itc @?_ @hL?_ b.f uLh
Bih4@?)c 6h@?Uic @?_ W|@*)( |i i?_TL?| @t i|ih bbSe Lh bb. ? @** U@tit2
5 Zh fkrrvh wr xvh wkh orqjhu vdpsoh shulrg zkhq dydlodeoh +udwkhu wkdq xvlqj d vwdqgdug vkruwhu
vdpsoh shulrg dfurvv doo frxqwulhv, lq rughu wr pd{lpl}h wkh srzhu ri sdudphwhu0vwdelolw| whvwv1 Zh
dovr frqvlghuhg vkruwhu vdpsohv iru wkh qrq0frqwlqhqwdo Hxurshdq frxqwulhv wr ghwhuplqh zkhwkhu
wkh fkrlfh ri vdpsoh shulrg dhfwhg wkh frpsdudelolw| ri hvwlpdwlrq uhvxowv dfurvv frxqwulhv1 Wkhvh
hvwlpdwhv |lhoghg uhvxowv vlplodu wr wkrvh rewdlqhg zkhq wkh ixoo vdpsoh lv xvhg dqg duh qrw glvfxvvhg
ixuwkhu ehorz1

S 
+it*|t
`i ti_ |i aL@?ti? ThLUi_hi |L it|4@|i |i UL?|i}h@|?} iU|Lht uLh 4TLh|t
@?_ i TLh|t( @TTi?_ # _itUhMit |i ThLUi_hi @?_ @TTi?_Uit ,k tL _i|@*i_
hit*|t W? _L?} tLc i i @4?i_ |i hLMt|?itt Lu |i hit*|t |L *@} *i?}|t h@?}?}
uhL4 2 |L b ^@h|iht h Uh|ih@ uLh ULLt?} |i *@} *i?}| ?U*_i |i UL?tt|i?U)
Lu |i t}?t Lu ULiUi?|t | |iLhi|U@* ThLht @?_ |i _i}hii Lu tih@* ULhhi*@|L? 
? |i hit_@*t Ai €?@* ti*iU|L? Lu *@} *i?}|t uLh |i UL?|i}h@|?} iU|Lht @hi_
@UhLtt UL?|hite
Ai *L?}h? i*@t|U|) it|4@|it @hi tL? ? A@M*i  E@? 8< _i?L|it t|@|t|U@*
t}?€U@?Ui @| |i DI *ii* W?UL4i i*@t|U|it uLh 4TLh|t h@?}i uhL4 fb Ea@T@?
|L 22 E|i N?|i_ k?}_L4 Ai ?UL4i i*@t|U|it uLh i TLh|t h@?}i uhL4 fH E|i
N?|i_ 5|@|it |L S EW|@*)

A@M*i G wL?}h? ,*@t|U|it
W?UL4i hUi
, TLh|t W4TLh|t , TLh|t W4TLh|t
@?@_@ 8 e8 fb8 fb8
6h@?Ui D8 S8 f28 fe8
Bih4@?) e8 D8 f 8 ffS
W|@*) S8 e8 fb fe8
a@T@? 8 fb8 f8 f 8
Nk 8 228 S8 fS
N5 fH8 H8 D8 f 8

Ai it|4@|i_ ThUi i*@t|U|itc T@h|U*@h*) L? |i 4TLh| t_ic @hi *Lih |@?
|Lti }i?ih@**) uL?_ ? |i *|ih@|hi 5TiU€U@**)c ThUi i*@t|U|it uLh UL?|?i?|@*
,hLTi@? UL?|hit @hi ? 4Lt| U@tit ?L|Ui@M*) *Lih |@? |Lti Lu |i L|ih B.
UL?|hit W?_ii_c |i hit*|t uLh 6h@?Ui @?_ Bih4@?) u@* |L 4ii| |i @ht@**
wih?ih UL?_|L?D ?i u@U|Lh |@| 4@) i*T |L @UUL?| uLh |iti *Lih it|4@|it t
|@| Lh 4i@thit Lu |h@_i L*4i ?U*_it ML| L* @?_ tihUit Ei U*_?} u@U|Lh 
?UL4i Ai ?U*tL? Lu L* *Liht |i it|4@|i_ ThUi i*@t|U|) Lu 4TLh|t MiU@ti
Lu |i _i*@)t ? @_t|?} |i U@T|@* t|LU! W? @__|L?c |i ?U*tL? Lu tihUit
6 Dv d uvw vwhs/ zh xvhg dq Dxjphqwhg Glfnh|0Ixoohu whvw wr lghqwli| wkh wlph vhulhv surshuwlhv
ri wkh gdwd iru hvwlpdwlrq1 Lq dgglwlrq wr d frqvwdqw whup dqg d wuhqg/ zh lqfoxghg irxu odjv iru
wkh fkdqjh ri wkh yduldeoh ehlqj h{dplqhg1 Wkh uhvxowv vxjjhvw +vhh dsshqgl{ F, wkdw wkh yduldeohv
xvhg lq rxu uhjuhvvlrq dqdo|vlv duh doo lqwhjudwhg ri rughu rqh1
7 Rzlqj wr wkh suhvhqfh ri odjjhg hqgrjhqrxv yduldeohv lq wkhvh htxdwlrqv/ wkh shulrg ri dgmxvw0
phqw lv jhqhudoo| orqjhu wkdq wkh odj ohqjwk xvhg lq hvwlpdwlqj wkhvh v|vwhpv1
8 Dsshqgl{ O uhsruwv hvwlpdwhg hodvwlflwlhv iru Jhupdq dqg Iuhqfk wudgh zlwk qrq0HX frxqwulhv/
dorqj zlwk vhyhudo elodwhudo htxdwlrqv +lqyroylqj Jhupdq wudgh zlwk Iudqfh dqg zlwk wkh Xqlwhg
Vwdwhv,1 Wkh sulfh hodvwlflw| hvwlpdwhv rewdlqhg lq wkhvh dgglwlrqdo whvwv gr qrw ryhuwxuq wkh orz0
sulfh hodvwlflw| uhvxowv uhsruwhg khuh1

.
4@) *Lih |i ThUi i*@t|U|) Lu ML| i TLh|t @?_ 4TLh|t |L |i i |i?| |@| |i
tMt|||@M*|) Mi|ii? _L4it|U @?_ uLhi}? tihUit t *Lih |@? |@| uLh }LL_t ?
}i?ih@* EUL?i?|L?@* |h@_i i^@|L?t }i?ih@**) @i uLUti_ L? }LL_t @*L?i
Ai tLh|h? i*@t|U|it LM|@?i_ M) |i ihhLhULhhiU|L? uLh4*@|L?t E.H @MLi
@hi tL? ? |@M*i 2( _i|@*t @hi Thiti?|i_ ? @TTi?_Uit ,k ih@**c |ihi t @ }LL_
_i@* *itt ?uLh4|) ? |i tLh||ih4 ?UL4i i*@t|U|it Lu |i UL?|?i?|@* ,hLTi@?
UL?|hit |@? ? |i U@ti Lu |i UL?|i}h@|L? hit*|t

A@M*i 2G 5Lh|h? ,*@t|U|it
W?UL4i hUi
, TLh|t W4TLh|t , TLh|t W4TLh|t
@?@_@ 8  8 fD8 f
6h@?Ui H8 S8 f f
Bih4@?) fD f8 f f28
W|@*) 2 8 f8 f 8 ff
a@T@? fS f8 fD8 f
Nk 8 f8 f28 ff
N5 H8 f8 fD8 f

W? @__|L?c |i tLh||ih4 ThUi i*@t|U|it @hi ^|i *L itTiU@**) uLh |i ,hLTi@?
UL?|hit

e @h@4i|ih L?t|@?U)
e L Ait|t
`i @ttitti_ |i t|@M*|) Lu |i ?UL4i @?_ ThUi i*@t|U|it | L |it|t Aiti
|it|t @?@*)3i |i t|@M*|) Lu |i Lih@** i^@|L? M) UL4T@h?} |i Mi@Lh Lu |t
hit_@*t _h?} @*|ih?@|i T@ht Lu tMt@4T*it `i 4T*i4i?| |t t|h@|i}) ? uLh
t|iTt 6ht|c i tT*| |i t@4T*i ? bHb @?_ ti |i €ht| tMt@4T*i |L LM|@? ?|@*
i*@t|U|) it|4@|it 5iUL?_c i ti |iti ?|@* it|4@|it |L uLhiU@t| |h@_i |hL}
bbe t?} |hii uLhiU@t| Lh3L?t |@| _gih ? *i?}| Ah_c i |it| i|ih |i
uLhiU@t| ihhLht @hic L? @ih@}ic t|@|t|U@**) i^@* |L 3ihL uLh i@U Lh3L? *i?}| 
hiiU|L? Lu |t )TL|itt 4i@?t |@| ?UL4i @?_ ThUi i*@t|U|it U@??L| Mi
|hi@|i_ @t UL?t|@?|t uLh |@| T@h|U*@h ULUi Lu t@4T*i tT*| 6?@**)c i i |i?_ |i
€ht| tMt@4T*i M) L?i ^@h|ihc T_@|i |i i*@t|U|) it|4@|itc @?_ hiUL4T|i |i
uLhiU@t| |it|t At ThLUitt Lu 4L?} uLh@h_ |i t@4T*i tT*| UL?|?it ?|* @** |i
LMtih@|L?t @hi ti_ Ai hit*| t @ UL**iU|L? Lu |it|t Lu T@h@4i|ih UL?t|@?U) uLh
i@U t@4T*i tT*| t|@h|?} ? bbf
6Lh @ }i? t@4T*i tT*|c i UL?t_ih |hii Lh3L?t @** Lu |i4 uLUt?} L? |i
bbft ?i ?L*i_ @ tihit Lu L?i^@h|ih@i@_ UL4T@htL?t Ai tiUL?_ ?L*i_

H
@ tihit Lu TihL_ @i@_ UL4T@htL?tc | |i t@4T*iTihL_ tT*| @| bHbe ?
@** U@tit @?_ |i tiUL?_ tMt@4T*i ?Uhi@t?} ? *i?}| uhL4 ' ^@h|ih |L '2f
^@h|iht Ai |h_ ?L*i_ 4L?} |i t@4T*i tT*| L| L?i ^@h|ih @| @ |4i
t|@h|?} uhL4 bHbe @?_ uLhiU@t|?} |L |i i?_ Lu |i it|4@|L? t@4T*i Ebbee( ?
|t U@tic |i Lh3L? _hLTt uhL4 '2f ^@h|iht |L ' Ai hit*|t @hi t44@h3i_ 
? A@M*i Mi*L @?_ |i _i|@*t @hi Thiti?|i_ ? @TTi?_Uit ,k
Ai €ht| |hii UL*4?t Lu |i |@M*i }i |i hit*|t uLh |i |hii ti|t Lu i^@|L?t
Ai i?|hit ?_ih |iti UL*4?t ?_U@|i i|ih |i i_i?Ui Lu i^@|L? ?t|@M*|)
@TTi@hi_ |L Mi t|hL?} E?4ihLt u@*hit Lu |i L |it| ?_U@|i_ M) Rnnnc
4L_ih@|i ELUU@tL?@* u@*hit Rnnc i@! EL?i Lh |L u@*hit @| 4Lt| Rnc Lh
@Mti?| @*|L}i|ihc Rf Ai uLh| UL*4? ?_U@|it |i TihL_t Lu }hi@|it| ?t|@M*|)
W?tTiU|L? Lu |i hit*|t hii@*t |hii €?_?}t 6ht|c ?t|@M*|) ? |i i TLh|
i^@|L?t t 4Lhi uhi^i?| |@| ? |i 4TLh| i^@|L? ?i hi@tL? uLh |t hit*| t
|@| |i _@|@ uLh |i hi*@|i ThUi Lu 4TLh|t @**L uLh U@?}it ? @ UL?|h)<t LTi?
?itt ihi@t |i i TLh| _@|@ _L ?L| 5iUL?_c |i L?*) UL?|hit |L| @?) t}? Lu 
?t|@M*|) ? |h@_i i^@|L?t @hi @?@_@ EMiuLhi @u|@ @?_ a@T@? 6?@**)c |i t)t
|i4 Lu UL?|i}h@|L? i^@|L?t |i?_i_ |L tL t*}|*) }hi@|ih i_i?Ui Lu ?t|@M*|)
|@? i|ih |i t?}*i UL?|i}h@|L? i^@|L? Lh |i ihhLhULhhiU|L? i^@|L?

A@M*i G 6hi^i?U) Lu VL*@|L?t Lu ,^@|L?t|@M*|) O)TL|itt
, TLh|t
L?|i}h@|L? , #@|it Lu W?t|@M*|)
, TLh|t L?*) 5)t|i4
@?@_@ f f f 
6h@?Ui nnn nnn n bbfb
Bih4@?) nnn nnn n bbfbe
W|@*) f nn n bbfbe
a@T@? f f f 
Nk f n n bb
N5 n f n bbc bb

W4TLh|t
L?|i}h@|L? , #@|it Lu W?t|@M*|)
W4TLh|t L?*) 5)t|i4
@?@_@ f f f 
6h@?Ui f f f 
Bih4@?) nnn nnn n bbfbe
W|@*) f n f bb2
a@T@? f f f 
Nk f f f 
N5 f nn f bb

b
e2 k@*4@? 6*|ih Ait|t
AL @ttitt |i t|@M*|) Lu |i ?UL4i @?_ ThUi i*@t|U|) it|4@|it 4Lhi tTiU€U@**)c 
i hiit|4@|i_ @ t4T*€i_ ihtL? Lu |i 4TLh| @?_ i TLh| i^@|L?t t?} |i
k@*4@? €*|ih Ek6 |iU?^i At ThLUi_hi @**Lt |i ULiUi?|t L? ?UL4i @?_
hi*@|i ThUit |L @h) Lih |i t@4T*i TihL_ M) 4L_i*?} |i4 @t h@?_L4 @*!tS
Ai k6 |iU?^i @t @TT*i_ |L |i 4TLh| i^@|L?t Mi}???} ? bHf @?_ |i
i TLh| i^@|L?t Mi}???} ? bHD.
iU@ti Lu UL4T*i |it ?L*i_ ? @TT*)?} |i k6 |iU?^i |L i|ih |i t)t|i4
Lu UL?|i}h@|?} i^@|L?t Lh |i ihhLhULhhiU|L? i^@|L?t | |ih 4*|T*i *@}
ULiUi?|tc i @TT*i_ | ?t|i@_ |L @ t4T*i t|@|U ihtL? Lu |i |h@_i i^@|L?t
Ei | ?L *@}t `i t|@h| M) UL4T@h?} |i u**t@4T*i it|4@|it uhL4 |i k6
4i|L_ t?} |i t|@|U i^@|L?t uLh i@U UL?|h) |L |Lti LM|@?i_ | |i *L?}
h? ULiUi?|t it|4@|i_ ? |i UL?|i}h@|L? i^@|L?t ? |i L*ic |i t|@|U
i*@t|U|it @hi ^|i t4*@h ? 4@}?|_i |L |i UL?|i}h@|L? i*@t|U|it ? 4Lt|
U@tit | |i ThUi i*@t|U|it Lu Nk |h@_i Mi?} |i Uiu i UiT|L? E|@M*i e
9 Pruh vshflfdoo|/ rxu hvwlpdwlrq xvlqj wkh Ndopdq owhu hqwdlov hvwlpdwlqj/ iru h{dpsoh/ wkh
iroorzlqj htxdwlrq iru h{sruwv=
{w @ w . w  |iw . w  us{w . xw
w @ w4 . xsgdwlqj uxoh ghshqglqj rq revhuydwlrqv wkurxjk w1
w @ w4 . xsgdwlqj uxoh ghshqglqj rq revhuydwlrqv wkurxjk w1
w @ w4 . xsgdwlqj uxoh ghshqglqj rq revhuydwlrqv wkurxjk w1
xw Q +3>  5 ,=
Diwhu rewdlqlqj lqlwldo hvwlpdwhv iru wkh htxdwlrq*v frhflhqwv xvlqj dq lqlwldo vdpsoh ri Q revhu0
ydwlrqv/ wkh Ndopdq owhu dxjphqwv wkh vdpsoh e| rqh revhuydwlrq dqg frpsxwhv wkh hvwlpdwhv iru
wkh Q.4wk shulrg xvlqj dq xsgdwlqj uxoh wkdw lqfrusrudwhv doo wkh revhuydwlrqv wkurxjk wkh Q.4wk
shulrg1 Wkh hvwlpdwhg hodvwlflwlhv wkh Q.4wk shulrg ehfrph wkh lqlwldo frqglwlrqv iru wkh hvwlpdwhg
hodvwlflwlhv iru wkh Q.5wk shulrg zklfk wkh Ndopdq owhu phwkrg rewdlqv e| lqfuhdvlqj wkh vdpsoh
e| rqh revhuydwlrq wr Q.5 dqg dsso|lqj wkh xsgdwlqj uxoh1 Wklv surfhvv frqwlqxhv xqwlo doo wkh
revhuydwlrqv kdyh ehhq xvhg iru hvwlpdwlrq1
: Wkh odwwhu vwduwlqj srlqw zdv xvhg iru wkh h{sruw htxdwlrqv ehfdxvh ri wkh vkruwhu vdpsoh shulrg
dvvrfldwhg zlwk iruhljq JGS1

f
A@M*i e 5i?t|i Lu wL?}h? ,*@t|U|it |L ,t|4@|L? i|L_

W?UL4i ,*@t|U|it

, TLh|t W4TLh|t
L?|i}h@|L? 5|@|U L?|i}h@|L? 5|@|U
@?@_@  S e D
6h@?Ui D S S .
Bih4@?) e D D .
W|@*) S H e D
a@T@?  2 fb 
Nk   22 .
N5 fH fb H b

hUi ,*@t|U|it

, TLh|t W4TLh|t
L?|i}h@|L? 5|@|U L?|i}h@|L? 5|@|U
@?@_@ fb fD fb fb
6h@?Ui f2 f fe f
Bih4@?) f f2 ffS nf
W|@*) fb f fe f
a@T@? f fH f f
Nk S f fS f
N5 D e f fe

`i @*tL i @4?i |i T@|t Lu |i it|4@|i_ ?UL4i @?_ ThUi i*@t|U|it Lu 4
TLh|t @?_ i TLh|t uLh i@U Lu |i tii? UL?|hit E@h|t e @?_ D Ai i*@t|U|it 
? |i 4TLh| i^@|L?tc T@h|U*@h*) |i ?UL4i i*@t|U|itc |i?_ |L Mi 4Lhi t|@M*i
Lih |4i |@? |Lti ? |i i TLh| i^@|L?t UhLtt UL?|hitc Bih4@?)<t i*@t|U
|it @?_c thTht?}*)c |i N5 i TLh| i*@t|U|it tL |i }hi@|it| ?t|@M*|)c *i
a@T@?<t tL |i *i@t| `| hitTiU| |L TLttM*i |hi?_t ? i*@t|U|it t}}it|i_ M)
|iti hit*|tc ? tL4i U@titc 4Lt| ?L|@M*) @?@_@c |i N?|i_ 5|@|itc @?_ a@T@?c 
?UL4i i*@t|U|it Lu 4TLh|t @i Mii? hi*@|i*) t|@M*i ? hiUi?| )i@ht *i |Lti
Lu i TLh|t @i _iU*?i_ a@T@?<t i TLh| i*@t|U|) @t u@**i? uhL4 @ *ii* t*}|*)
@MLi |t 4TLh| i*@t|U|) ? |i 4_bHft |L Mi t*}|*) Mi*L ? |i bbftH W?
Bih4@?)c W|@*)c @?_ |i N?|i_ k?}_L4c |i LTTLt|i @t Mii? |hic | |i ?UL4i
i*@t|U|it Lu i TLh|t ht?} hi*@|i |L |Lti Lu 4TLh|t
; Wklvqglqj lv frqvlvwhqw zlwk wkh hduolhu revhuydwlrq wkdw rxu uhvxowv vkrzhg d vpdoohu hodvwlflw|
glhuhqwldo lq idyru ri h{sruwv wkdq kdg ehhq wkh fdvh lq hduolhu vwxglhv1


Chart 4

Kalman-Filter Income Elasticities

United States
2.5

2.0

Imports
1.5

1.0

Exports
0.5
1980 1985 1990 1995

Japan Germany
2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5
1980 1985 1990 1995 1980 1985 1990 1995

France Italy
2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5
1980 1985 1990 1995 1980 1985 1990 1995

United Kingdom Canada
2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5
1980 1985 1990 1995 1980 1985 1990 1995
Chart 5

Kalman-Filter Price Elasticities

United States
0.3

0.0

-0.3

Imports -0.6

-0.9

Exports -1.2

-1.5
1980 1985 1990 1995

Japan Germany
0.3 0.3

0.0 0.0

-0.3 -0.3

-0.6 -0.6

-0.9 -0.9

-1.2 -1.2

-1.5 -1.5
1980 1985 1990 1995 1980 1985 1990 1995

France Italy
0.3 0.3

0.0 0.0

-0.3 -0.3

-0.6 -0.6

-0.9 -0.9

-1.2 -1.2

-1.5 -1.5
1980 1985 1990 1995 1980 1985 1990 1995

United Kingdom Canada
0.3 0.3

0.0 0.0

-0.3 -0.3

-0.6 -0.6

-0.9 -0.9

-1.2 -1.2

-1.5 -1.5
1980 1985 1990 1995 1980 1985 1990 1995
W? |i N5 U@tic |i 4Li4i?| ? ?UL4i i*@t|U|it E|i 4TLh| i*@t|U|) 4L?} 
T t*}|*) *i |i i TLh| i*@t|U|) @t _iU*?i_ @t hit*|i_ ? @ _i??} Lu |i
}@T Mi|ii? |i it|4@|i_ 4TLh| @?_ i TLh| i*@t|U|it | |i t@4i |4ic Liihc
|i it|4@|i_ ThUi i*@t|U|) Lu N5 i TLh|t @t tL? tMt|@?|@* ?t|@M*|) EU
|@|?} Mi|ii? f @?_ e Lih |i T@t| |i? )i@htc U@t|?} _LM| L? |i hi*@M*|)
Lu |i i TLh| i^@|L? @*|L}i|ih Lhi MhL@_*)c ThUi i*@t|U|it |i?_ 4Lhi Lu|i?
|@? ?L| |L Mi ?Uhi@t?} Lih |4i ? E@MtL*|i 4@}?|_i

e |Lut@4T*i hi_U|L?
`i @*tL _}i_ |i hi*@M*|) Lu |i i^@|L?t L|t_i |i it|4@|L? TihL_ AL |@|
i?_c i ti_ |i ihhLh ULhhiU|L? 4L_i*t |L }i?ih@|i TLt|t@4T*i Thi_U|L?t Lih
bbDbS( i t44@h3i ihi |i hit*|t U @hi Thiti?|i_ ? _i|@* ? @TTi?_Uit
,k Bi? |i bbDbS Thi_U|L?tc i |it| |i )TL|itt Lu T@h@4i|ih UL?t|@?U) 
| |i L |it|( tii Oi?_h) @?_ #LLh?! EbbSc T@}i 222 A@M*i D hiTLh|t |i
ThLM@M*|) uLh |i @*_|) ?** )TL|itt Lu T@h@4i|ih UL?t|@?U)( i?|hit Mi*L ffD 
?_U@|i @ hiiU|L? Lu |t )TL|itt @| |i €i TihUi?| t}?€U@?Ui *ii* @ti_
L? |i hit*|tc tLh||ih4 Thi_U|L?t Lu i TLh|t @?_ 4TLh|t tL ?L i_i?Ui Lu
T@h@4i|ih ?t|@M*|) _h?} bbDbS

A@M*i DG |Lu5@4T*i L Ait|t
, TLh|t W4TLh|t
@?@_@ fb fbS
6h@?Ui ffb fbb
Bih4@?) feS f b
W|@*) f2S f D
a@T@? f D f 2
Nk f 2 fbD
N5 f2. fHe

| |L €?_ tTTLh| uLh |i )TL|itt Lu T@h@4i|ih UL?t|@?U) _Lit ?L| 4T*) |@|
|i TLt|t@4T*i Thi_U|L?t @hi @UUh@|i `i |t 4T*i4i?| @ Thi_U|iu@*hi |it|(
tii Oi?_h) @?_ #LLh?! EbbSc T@}i 222 A@M*i S hiTLh|t |i ThLM@M*|) uLh |i 
@*_|) ?** )TL|itt |@| |i 4i@?t^@hi_ uLhiU@t| ihhLh t i^@* |L |i @h@?Ui
Lu |i ?t@4T*i hit_@*t( i?|hit Mi*L ffD ?_U@|i @ hiiU|L? Lu |t )TL|itt
@| |i €i TihUi?| t}?€U@?Ui *ii* `i €?_ ?L i_i?Ui Lu tU u@*hit

2
A@M*i SG hi_U|i 6@*hi Ait|t
, TLh|t W4TLh|t
@?@_@ fb fbS
6h@?Ui ff. fbb
Bih4@?) f . f S
W|@*) f2 fH
a@T@? f2. f22
Nk f22 fbS
N5 fH f.S

ee 544@h) Lu +it*|t M) L?|h)
Ai @MLi @?@*)tt UL?tt|i_ Lu |hii it|4@|L? |iU?^it ETihuLh4i_ t?} |i
t@4i _@|@ ti| i@U |4i @?_ @*|ih?@|i t|@M*|) |it|t uLh i TLh|t @?_ 4TLh|t uLh
i@U Lu |i B. UL?|hit A@M*i . ThL_it @ t44@h) M) UL?|h) Lu Lh €?_?}t
6Lh i@U UL?|h)c |i |@M*i hiTLh|t EuLh 4TLh|t L? |i *iu| @?_ i TLh|t L? |i h}|
|i t|@|U ?UL4i i*@t|U|) @?_ UL44i?|t L? |t t|@M*|) M@ti_ L? |i k@*4@? €*|ih
|iU?^i E€ht| *?ic UL4T@hi_ | |i *L?}h? EUL?|i}h@|L? ?UL4i i*@t|U|)
EtiUL?_ *?i Ai |h_ *?i _itUhMit |i t|@M*|) Lu |i t|@|U ThUi i*@t|U|) @?_
|i €?@* *?i t44@h3it |i L |it| hit*|t
6Lh |i N?|i_ 5|@|itc Lh hit*|t uLh 4TLh|t @TTi@h |L Mi 4Lhi hLMt| |@?
|Lti uLh i TLh|t `i LM|@? @? it|4@|i_ ?UL4i i*@t|U|) uLh 4TLh|t |@| t
?i@h*) 2 @ hit*| UL44L?*) uL?_ ? |i *|ih@|hi Ai k@*4@? €*|ih hit*|t uLh |i
i TLh| ThUi i*@t|U|) t}}it| |@| |t |iU?^i t ?L| tUUii_?} ? €?_?} @ tiu*
it|4@|i uLh |@| i*@t|U|)c Tih@Tt MiU@ti Lu |i @Mti?Ui Lu *@}t ? |i it|4@|?}
i^@|L? Ai TihL_ Lu |i ih) t|hL?} _L**@h ? |i 4_bHft t ?_U?} t?}t 
? |i it|4@|i_ i*@t|U|) |@| 4@) Mi UL?|hM|?} |L |i @TT@hi?| 4Li4i?| ?
|i it|4@|i_ ?UL4i i*@t|U|)c @t i** 6Lh a@T@?c i LM|@?i_ ^|i t|@M*i @?_
}i?ih@**) UL?tt|i?|c @*|L} tL4i@| thTht?}c it|4@|it Lu |i ?UL4i @?_ ThUi
i*@t|U|it h hit*|t t}}it| |@| |i ?UL4i i*@t|U|it @hi @ML| i^@* EU*Lti |L
 @?_ |t |@| |ihi t ?L i*@t|U|) }@T |i?_?} |L@h_ thT*t UL?|h@h) |L i@h*ih
€?_?}t ? |i *|ih@|hi
6Lh Bih4@?)c Lh hit*|t TL?| |L T@h@4i|ih ?t|@M*|) @| |i |4i Lu hi?€U@
|L?( i LM|@? t4*@h ?UL4i i*@t|U|it E?i@h D uLh i TLh|t @?_ 4TLh|tc M| ih)
*L ThUi i*@t|U|it @?_ i_i?Ui Lu ?t|@M*|) 6Lh 6h@?Ui @?_ W|@*)c @}@? |i i 
TLh| i^@|L?t @TTi@h |L Mi tL4i@| *itt i** it|4@|i_ |@? |i 4TLh| i^@|L?t
6Lh ML|c |i it|4@|i_ i*@t|U|it uLh i TLh|t @?_ 4TLh|t @hi UL?tt|i?| @UhLtt |i
|iU?^it ti_ @?_ @TTi@h |L Mi @ML| i^@* E? |i h@?}i Lu D .
6Lh |i N?|i_ k?}_L4c |i it|4@|i_ ?UL4i i*@t|U|) uLh 4TLh|t t ^|i 
} EU*Lti |L |@| uLh |i N?|i_ 5|@|it @?_ hit*|t uLh |@| i^@|L? t}}it| ?L 
?t|@M*|) 6Lh i TLh|tc |i k@*4@? €*|ih |iU?^i t}}it|t tL4i T@h_ 4Li4i?|

 
? |i ?UL4i i*@t|U|)c M| | t @*@)t tL4i@| *Lih |@? |@| uLh 4TLh|t L|
ThUi i*@t|U|it @TTi@h |L Mi ih) *L ? |i k@*4@? it|4@|itc @ hit*| ?L| UL?tt|i?| 
| |i *L?}h? UL?|i}h@|L? hit*|tc itTiU@**) uLh i TLh|t
6Lh @?@_@ @*tLc |i hit*|t uLh i TLh|t @TTi@h *itt hLMt| |@? |Lti uLh 4TLh|t
Ai ?UL4i i*@t|U|) uLh 4TLh|t t UL?tt|i?|*) it|4@|i_ @| @ML| D @?_ |@|
i^@|L? t }i?ih@**) t|@M*ic @*|L} |i ThUi i*@t|U|) 4@) Mi ht?} Lih |4i
Ai ?UL4i i*@t|U|) uLh i TLh|t t ?L| UL?tt|i?| @UhLtt Lh |iU?^it @?_ @TTi@ht
|L Mi tu|?} ? |i k@*4@? it|4@|it t @ UL?ti^i?Uic |i *L?}h? UL?|i}h@|L?
hit*|t t}}it| t|@M*i i^@|L?t | |i ?UL4i i*@t|U|) uLh 4TLh|t i Uii_?} |@|
uLh i TLh|tc *i |i k@*4@? |iU?^i hiihtit |i i*@t|U|) }@T @?_ t}}it|t 
?t|@M*|) ? |i i TLh| i*@t|U|)

e
A@M*i .G 544@h) Lu 6?_?}t
W4TLh|t , TLh|t
N?|i_ 5|@|it
k@*4@? #+ G 5|@M*i @| b k@*4@? #+s G _L?@h_ |hi?_ |L fb
w+ #+ G t@4i @| H w+ #+s G ' fH
k@*4@? #oR6 t|@M*i M| *L k@*4@? #oR% G ?t|@M*i @?_ ?hi*@M*i 
LG Bi?ih@**) t|@M*i LG Bi?ih@**) t|@M*i
a@T@?
k@*4@? #+ G 5|@M*i @|  k@*4@? #+s G |hi?_t uhL4 D |L 2
w+ #+ G t@4i @| fb w+ #+s G ' 
k@*4@? #oR6 t|@M*i M| *L k@*4@? #oR% G t|@M*i @| fH 
LG t|@M*i LG t|@M*i
Bih4@?)
k@*4@? #+ G Ahi?_t uhL4 2 |L . k@*4@? #+s G U|@|it @hL?_ D
w+ #+ G t@4i @| D w+ #+s G ih) U*Lti @| e
k@*4@? #oR6 t4@** ?Uhi@titc U*Lti |L f k@*4@? #oR% G t|@M*i M| *L 
LG ?t|@M*i LG ?t|@M*i
6h@?Ui
k@*4@? #+ G t|@M*i @| . k@*4@? #+s G U|@|it @hL?_ S
w+ #+ G ih) U*Lti @| S w+ #+s G ih) U*Lti @| D
k@*4@? #oR6 G t|@M*i @| f k@*4@? #oR% G t|@M*i M| *L 
LG t|@M*i LG tL4i ?t|@M*|)
W|@*)
k@*4@? #+ G t|@M*i @| D k@*4@? #+s G htit |L H
w+ #+ G U*Lti @| e w+ #+s G U*Lti @| S
k@*4@? #oR6 G t|@M*i k@*4@? #oR% G tL4i 4Li4i?| M| *L 
LG 5|@M*i LG tL4i ?t|@M*|)
N?|i_ k?}_L4
k@*4@? #+ G t|@M*i @| . k@*4@? #+s G htit |L 
w+ #+ G t|@M*i @| 22 w+ #+s G U*Lti @| 
k@*4@? #oR6 G t|@M*i @hL?_ 3ihL k@*4@? #oR% G t|@M*i M| ih) *L 
LG t|@M*i LG }i?ih@**) t|@M*i
@?@_@
k@*4@? #+ G t|@M*i @| D k@*4@? #+s G _iU*?it |L S
w+ #+ G t|@M*i @| e w+ #+s G ' 
k@*4@? #oR6 G hti Lih |4i k@*4@? #oR% G hti Lih |4i 
LG Bi?ih@**) t|@M*i LG t|@M*i

D
+iuihi?Uit
do i}*Lt!c ac ? |i t|hU|h@* t|@M*|) Lu |h@_i i^@|L?tG |i U@ti Lu a@T@?c
aLh?@* Lu W?|ih?@|L?@* L?i) @?_ 6?@?Uic VL* Sc L c bb.c ebD2

d2o *?ic `c N?|i_ 5|@|it , |ih?@* _t|4i?| @?_ |i `Lh*_ ,UL?L4)c `@t
?}|L?c #G W?t|||i uLh W?|ih?@|L?@* ,UL?L4Utc bHb

d o #i)@!c A c `  5@)ihc @?_ + w 5Th?!*ic R? , @4?@|L? Lu |i 5|hU
|h@* 5|@M*|) Lu #t@}}hi}@|i_ N5 W4TLh| #i4@?_c +ii Lu ,UL?L4Ut
@?_ 5|@|t|Utc .c bHbc . e

deo Oi?_h)c #@_ 6 @?_ ah}i? #LLh?!c UBi bfc wL?_L?G W?|ih?@|L?@* AL4
tL? t?itt hittc bbS

dDo BL*_t|i?c c @?_  5 k@?c RW?UL4i @?_ ThUi igiU|t ? uLhi}? |h@_ic ?
+ aL?it @?_  ki?i? Ei_tc O@?_MLL! Lu W?|ih?@|L?@* ,UL?L4Utc 2 ELh|
OL**@?_G 4t|ih_@4c bHDc fefD

dSo OLLTihc c RAi t|@M*|) Lu ?UL4i @?_ ThUi i*@t|U|it ? N5 |h@_ic b.D
b..c W?|ih?@|L?@* 6?@?Ui #tUttL? @Tih L bc L@h_ Lu BLih?Lht Lu
|i 6i_ih@* +itihi 5)t|i4c a?i b.H

d.o OLLTihc  @?_ a @h^i3c R, U@?}i +@|itc hUitc @?_ , |ih?@* _t|4i?|
? |i N?|i_ 5|@|it @?_ a@T@?c ?  ki?i?c i_c N?_iht|@?_?} W?_iTi?_i?Uic
h?Ui|L? aG h?Ui|L? N?iht|) hittc bbDc f.SH

dHo OL|@!!ihc Oc @?_ 5 @}iic RW?UL4i @?_ ThUi i*@t|U|it ? Lh*_ |h@_ic
+ii Lu ,UL?L4Ut @?_ 5|@|t|Utc Dc bSbc 2D

dbo aL@?ti?c 5c bHHc R5|@|t|U@* ?@*)tt Lu L?|i}h@|L? ViU|Lhtc aLh?@* Lu
,UL?L4U #)?@4Ut @?_ L?|hL*c 2c 2 2De

dfo @h^i3c ac R*@|ih@* Ah@_i ,*@t|U|itc +ii Lu ,UL?L4Ut @?_ 5|@|t|Utc
.2c bbfc .f..

do @h^i3c ac RwL?}TihL_ 5|@M*i Ah@_i ,*@t|U|it uLh @?@_@c a@T@?c @?_ |i
N?|i_ 5|@|itc +ii Lu W?|ih?@|L?@* ,UL?L4Utc bbHc uLh|UL4?}

d2o @t!tc k ,c R,_i?Ui L? 5u|t ? |i #i|ih4?@?|t Lu N5 @?u@U|h?}
6Lhi}? Ah@_ic bDHb.Sc +ii Lu ,UL?L4Ut @?_ 5|@|t|Utc SDc }t| bH c
eDe22

d o 5@)ihc `  @?_ + w 5Th?!*ic RAi #i4@?_ uLh W4TLh|t @?_ , TLh|t ? |i
N5G  5hi)c aLh?@* Lu ,UL?L4Ut @?_ 6?@?Uic 2fEc 5Th?} bbSc e..H

S
deo 5|ih?c + c  @4c @?_  Bhii?c R,_i?Ui L? t|hU|h@* U@?}i ? |i
_i4@?_ uLh @}}hi}@|i N5 4TLh|t @?_ i TLh|tc aLh?@* Lu L*|U@* ,UL?L4)c
H.c b.bc .bb2

dDo 5|ih?c + c a 6h@?Utc @?_  5U4@Uihc hUi ,*@t|U|it ? W?|ih?@|L?@*
Ah@_iG ? ??L|@|i_ M*L}h@T) E@U**@?G wL?_L?c b.S

dSo ~i|3c a @?_ # k i4Mih|L?c R@h@4i|ih W?t|@M*|) ? }}hi}@|i N5 W4TLh|
#i4@?_ 6?U|L?tc aLh?@* Lu W?|ih?@|L?@* L?i) @?_ 6?@?Uic 2c bb c
SDeSS. 544@h)

. 
`i}|t uLh 6Lhi}? }}hi}@|it
Ai it|4@|L? Lu |i i*@t|U|it uLh @ UL?|h)< i TLh|t ?ii_t _@|@ uLh uLhi}? B#
@?_ uLhi}? B# _i@|Lh `i UL?t|hU|i_ |iti uLhi}? @}}hi}@|it t?} @ }iL4i|hU
4i@? | M*@|ih@* i TLh| t@hit uLh bbD @t i}|t( |iti t@hit @hi tL? Mi*L

*@|ih@* , TLh| 5@hit
W4TLh|?}q, TLh|?} @?@_@ 6h@?Ui Bih4@?) W|@*) a@T@? Nk N5
@?@_@ fffb fffH ff2 ff2 ff2f f2f
6h@?Ui fff. fS fH ffe ffbD ff2
Bih4@?) ff2 fS. fSf ffeD f2 ff S
W|@*) fff. ffbS ff.D fffb ffeb ffe
a@T@? ffeD ff2e ff2. ff2H ff  ff
Nk ffe ffH ffHf ffD ff 2 ffeS
N5 f..H ffS ff.e ff.D f2HD f2f
|ih ,# ffD f 2D f S. f2H2 ffSS f . f
i UL fffe fff fffD fff fffH fff2 ff.2
W,t ff2H ff e ff b ff b f2eb ffeb fH
, ff2 ff e ff2 ff ffe ff b ff 
+` ffef fS fH. f2ff f22b f e f2eD
AL|@* ff ff ff ff ff ff ff

5LhUiG #hiU|L? Lu Ah@_ic W?|ih?@|L?@* L?i|@h) 6?_ 

W6<t +i@* , U@?}i +@|i
AL t|_) |i ti?t||) Lu |i hit*|tc i UL?t_ih @*|ih?@|i tTiU€U@|L?t Lu |i 
4TLh| @?_ i TLh| i^@|L?t ? U i tMt|||i uLh |i hi*@|i ThUi |ih4t _i€?i_
@MLi |i W6<t hi@* igiU|i i U@?}i h@|itc oeeoGb
 L u  .m*
oeeo ' *L}E c
L u8

\  Lu [
 Lu8 ' E  c  ' c
 '

.m*  '

Ai ?4ih@|Lh Lu oeeo t |i ?Lh4@*3i_ ?| *@MLh ULt| Lu |i | UL?|h) i 
Thitti_ ? N5m( |i _i?L4?@|Lh t |i ?Lh4@*3i_ ?| *@MLh ULt| uLh |i hit| Lu |i
< Wdnhq iurp Lqwhuqdwlrqdo Ilqdqfh Vwdwlvwlfv1

H 
|<t Lh*_c i Thitti_ ? N5m Ai i}|tc  c @hi M@ti_ L? @}}hi}@|i |h@_i Lt
uLh 4@?u@U|hi_ }LL_t ? ?Uhi@ti ? oeeo hiThiti?|t @ hi@* @TThiU@|L? Lu |i
_L4it|U Uhhi?U) U t|4*@|itc ? |iLh)c ThU@tit Lu uLhi}? ThL_U|t `i
tL*_c |ihiuLhic i TiU| @ ?i}@|i ThUi i*@t|U|) uLh i TLh|t @?_ @ TLt|i ThUi
i*@t|U|) uLh 4TLh|t
At 4i@thi tit i}|t M@ti_ L? @}}hi}@|i |h@_i Lt uLh 4@?u@U|hi_ }LL_t
L?*) @?_ |t |i ThL_U| ULih@}i Lu |t 4i@thi t ?@hhLih |@? |i L?i ULhhi
tTL?_?} |L |i 4i@thi Lu |h@_i Mi?} t|_i_ ?@4i*)c }LL_t @?_ tihUit Lhi
Lihc }i? |@| LMtih@|L?t L? |h@_i L*4it @hi }i?ih@|i_ M) _i@|?} |i ?L4?@* 
@*i Lu |h@_i M) |i ULhhitTL?_?} ThUi ?_i c hi*@?Ui L? |i W6<t hi@* igiU|i
i U@?}i h@|i _Lit ?L| i*4?@|i |i ?ii_ |L ti |i UL?i?|L?@* |h@_i _i@|Lht
6?@**)c TM*ti_ _@|@ uLh |i W6<t hi@* igiU|i i U@?}i h@|it €*|ih L| tLh|h? 
U|@|L?t | |i OL_hU!hitUL|| €*|ih At |i _@|@ @hi ?L| _i@**) t|i_ uLh
it|4@|?} tiT@h@|i*) tLh| @?_ *L?} h? |h@_i i*@t|U|it 

h_ih Lu W?|i}h@|L?
AL _i|ih4?i |i |4itihit ThLTih|it Lu |i @h@M*itc i ti_ @? }4i?|i_
#U!i)6**ih |it| W? @__|L? |L ?U*_?} @ UL?t|@?| @?_ @ |hi?_c i @**Li_ uLh
uLh *@}t uLh |i U@?}i Lu |i @h@M*i Ai |it| hit*|t @hi Mi*L |ih ULhhitTL?_ 
?} t}?€U@?Ui *ii*t U 4i@?t |@| L?i U@??L| hiiU| |i )TL|itt |@| |iti 
@h@M*it uL**L @ h@?_L4 @*! E?|i}h@|i_ Lu Lh_ih L?i

}4i?|i_ #U!i)6**ih Ait| +it*|t
hT u) 4 hT4 ) oeeo
@?@_@ b2   2eH 2b2 22 eD 2b2
6h@?Ui b 2 2fe  D DH 2 f  e
Bih4@?) b DS Sb  D 2Db 2b2 22
W|@*) .2 2f 2Se 2.e 2e e2 2f2
a@T@? 2D 2. 2e bS 2D2 f 2D
N?|i_ k?}_L4 e 22S 222  . 2 b 22 22
N?|i_ 5|@|it .e HH 2e. 2H2  2bS HH

# , Tih4i?|@* #it}?
6Lh4*@|L? AL it|4@|i |i *L?}h? i*@t|U|it |@| t44@h3i |i ?_ih*)?}
|hi?_t ? uLhi}? |h@_ic i @TT*) |i UL?|i}h@|L? |iU?^i Lu aL@?ti? EbHH
At |iU?^i ?L*it @TT*)?} 4@ 44 *!i*LL_ |L it|4@|i |i T@h@4i|iht Lu

b
@ t)t|i4 Lu i^@|L?tG
?
[
{5| ' V n K {5|  n kq 5|
3


3 n "|c "|  UEfc lc Eb
' 

ihi 5| ' E | @| R|c V t @  iU|Lh Lu ?|ihUiT|tc K t @ 4@|h Lu ULiUi?|t


uLh tLh|h? ?|ihhi*@|L?t( | t |i 4i@thi Lu |h@_i Ei TLh|t Lh 4TLh|t( @| t
|i 4i@thi Lu ?UL4i EuLhi}? Lh _L4it|U( R| t |i 4i@thi Lu hi*@|i ThUit EuLh
i TLh|t Lh 4TLh|t( @?_
3 43 4
k  k q  q 
kq ' C    D C    D 


k   k q  q
Ai i*i4i?|t Lu k 4i@thi |i tTii_ Lu @_t|4i?| @?_ @hi !?L? @t *L@_?} ULi
Ui?|t( |i iU|Lh Eq q2 q   ' q U@h@U|ih3it |i | *L?}h? hi*@|L? @4L?} |c


@|c @?_ R|
,t|4@|it _ihi_ uhL4 |i aL@?ti? ThLUi_hi @hi !?L? |L Mi ti?t|i |L |i
?4Mih Lu *@}t ?U*_i_ ? |i t)t|i4 W? @__|L?c it|4@|it Lu ?UL4i @?_ ThUi
i*@t|U|it @hi @*tL !?L? |L Mi ti?t|i |L |i ULUi Lu hi*@|i ThUi At i it|
4@|i_ |i i TLh| @?_ 4TLh| t)t|i4t t?} @*|ih?@|i *@} _t|hM|L?t @?_ 4i@thit
Lu ThUit AL ti*iU| |i *@} *i?}|c i 4T*i4i?| |i uL**L?} ti*iU|L? Uh|ih@ 6ht|c
UL?tt|i?U) | iUL?L4U |iLh)c @t hiiU|i_ ? |i t}?t Lu |i ULiUi?|t @?_ |i
i t|i?Ui Lu L?i UL?|i}h@|?} iU|Lh AL} 4*|T*i UL?|i}h@|L? iU|Lht @hi ?L| 
?UL?tt|i?| | iUL?L4U |iLh)c |ih Thiti?Ui h@tit _i?|€U@|L? ttit |@| **
Mi @__hitti_ ? u|hi hiti@hU 5iUL?_c UL?tt|i?U) | t|@|t|U@* |iLh)c @t hi 
iU|i_ ? |i @Mti?Ui Lu tih@* ULhhi*@|L? Lu |i hit_@*t Lu |i t)t|i4 AL _i|ih4?i
|i @Mti?Ui Lu tih@* ULhhi*@|L?c i |it| i|ih |i ULiUi?|t Lu @ V+ED L? i@U
t)t|i4<t hit_@*t @hi L?|*) 3ihL( i?|hit | @? 8 _i?L|i @ hiiU|L? Lu |i )TL|
itt Lu tih@* ?_iTi?_i?Ui ,?|hit | @ | ?_U@|i Lh ti*iU|L? uLh |i ?4Mih Lu
*@}t
@ti_ L? |i *L?}h? i*@t|U|) it|4@|itc i i T*@? tLh| h? U|@|L?t ?
|h@_i t?} @? ihhLhULhhiU|L? uLh4*@|L?G
[ [ [
{ | ' k { |  n
3 w {@|  n 3 4 {R|  n l. c| 
3 3

S S
6Lh Thiti?|@|L?@* ThTLtitc i hiTLh| E Swk  c E S4k  c @?_ E S
3 3
l
k  @?_ tL U@h|t
3 

| |i bDI UL?€_i?Ui M@?_t uLh @** Lu |i 4L_i*<t ULiUi?|t t?} hiUhti it|
4@|L? `i @*tL i @4?i |i i |i?| |L U |i hit_@*t Lu |i it|4@|?} i^@|L?t
@hi UL?tt|i?| | |i it|4@|L? @tt4T|L?t Ai |it|t @hi

5ih@* Lhhi*@|L?G 6|it| Lu |i ?** )TL|itt |@| |i ULiUi?|t Lu @? +ED uLh
|i hit_@*t @hi L?|*) i^@* |L 3ihL

2f
OL4Lt!i_@t|U|)G ||it| Lu |i ?** )TL|itt |@| |i @h@?Ui Lu |i hit_@*t t
UL?t|@?|

Lh4@*|)G 2 Ait| Lu |i ?** )TL|itt |@| |i _t|hM|L? Lu |i hit_@*t t
?Lh4@*

6?U|L?@* 6Lh4G +iti| |it| Lu |i ?** )TL|itt |@| |i tTiU€U@|L? _Lit ?L|
L4| UL4M?@|L?t Lu |i Thi_i|ih4?i_ @h@M*it 

@h@4i|ih 5|@M*|) `i ti_ |hii @h@?|t Lu |i L |it| @** Lu U ?L*i
|it|?} i|ih uLhiU@t| ihhLht @hi t|@|t|U@**) t}?€U@?| `i hiTLh| |it|hit*|t uLh
|i ?__@* |h@_i i^@|L? @?_ uLh |i UL?|i}h@|?} t)t|i4 @t @ L*i( i @*tL
hiTLh| |i t@4i |it|t uLh |i @ttLU@|i_ ihhLhULhhiU|L? 4L_i* uhL4 i@U |h@_i L
Ai uLhiU@t| TihL_ t bbfbbe Ai |hii |it|t @hi

?it|iT @i@_ 6|it|t ETG 5i^i?Ui Lu 6|it|t uLh |i )TL|itt |@| |i iU|Lh
Lu t|iT @i@_ uLhiU@t| ihhLht t 3ihL

6LhiU@t|t 6|it|t ETG 5i^i?Ui Lu 6|it|t uLh |i )TL|itt |@| |i iU|Lh Lu
t|iT @i@_ uLhiU@t| ihhLht t 3ihL( |i uLhiU@t| Lh3L?  ?Uhi@tit uhL4 c
|i *@t| _@|i Lu |i ?|@* t@4T*ic |L |i Uhhi?| LMtih@|L? | @t |i it|4@|L?
t@4T*i ?Uhi@tit

hi@!TL?| 6|it|t E_?G 5i^i?Ui Lu 6|it|t uLh |i )TL|itt |@| |i iU|Lh
Lu t|iT @i@_ uLhiU@t| ihhLht t 3ihL( |i uLhiU@t| Lh3L?  _iUhi@tit uhL4
A n  |L  @t |i it|4@|L? t@4T*i ?Uhi@tit ihi A t |i |L|@* ?4Mih Lu
LMtih@|L?t @?_  t |i ?4Mih Lu LMtih@|L?t hitihi_ @t ?|@* UL?_|L?t

6Lh @ u**ih _itUhT|L? Lu |iti |it|tc tii Oi?_h) @?_ #LLh?! EbbS
wi}i?_ uLh Bh@TtG  _i?L|it |i *L}@h|4 Lu hi@* i TLh|t Lu |i | UL?|h)(
[ _i?L|it |i ULhhitTL?_?} }hL| h@|i 2 _i?L|it |i *L}@h|4 Lu hi@* 4TLh|t
Lu |i | UL?|h) @?_ [2 hiThiti?|t |i ULhhitTL?_?} }hL| h@|i Ai @*it
uLh  @hi U ' @?@_@( i'Nk( u'6h@?Ui( }'Bih4@?)( 'W|@*)( 'a@T@?c 'N?|i_
5|@|it t @ @) Lu i @4??} |i |4itihit ThLTih|it Lu |i tihitc i __i
|i u** t@4T*i ?|L t tMt@4T*it @?_ @TT*) *i@t| t^@hit |L i@U tMt@4T*i( |i
ti}4i?|t _tT*@)i_ @*L?} |i *?i ULhhitTL?_ |L |Lti hi}hittL? *?it

, @?@_@? Ah@_i
Ai iL*|L? Lu @?@_@<t uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _tT*@)i_ 
? 6}hi  L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} | uLhi}? @?_
_L4it|U ?UL4i +i*@|i ThUit uLh ML| |h@_i Lt tL _L?@h_ |hi?_tc M| |i


W6<t 4i@thi Lu |i hi@* igiU|i i U@?}i h@|i Eoeeo tLtc ? |t U@tic L*@|*|)
UL4T@h@M*i |L |@| Lu |i UL?i?|L?@* 4i@thi Lu hi*@|i ThUit M@ti_ L? _i@|Lht
uhL4 |i @|L?@* W?UL4i UUL?|t

Export Volume Import Volume
5.5
5
5

4.5
4

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
6.5
Foreign GDP Domestic GDP
8.75

6
8.5

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Export Prices
.5 .5 Import Prices
Price Ratio
Price Ratio
IMF’s Reer
0 0
IMF’s Reer

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi G Ah@_ic W?UL4ic @?_ hUitG @?@_@ 

@?@_@? , TLh|t

wL?}h? 6LhUit Ai ?4Mih Lu UL?|i}h@|L? iU|Lht t ti?t|i |L ML| |i
4i@thi Lu ThUit @?_ |L |i ?4Mih Lu *@}t ?U*_i_ ? |i t)t|i4 i@th?} ThUit
@t |i i TLh| _i@|Lh hi*@|i |L |i uLhi}? B# _i@|Lh EoR% )i*_t ?L UL?|i
}h@|L? uLh t)t|i4t ?U*_?} uiih |@? ??i *@}t W?U*_?} ??i ^@h|iht )i*_tc 
Liihc L?i UL?|i}h@|L? iU|Lh U t}}it|t @ ThUi i*@t|U|) Lu  @?_ @? ?
UL4i i*@t|U|) Lu fH i@th?} ThUit @t |i W6<t oeeo hii@*t ?L UL?|i}h@|L? uLh
tTiU€U@|L?t ?U*_?} uiih |@? tii? *@}t |ihtic |i hit*|t hii@* hLMt|
it|4@|it Lu ?UL4i @?_ ThUi i*@t|U|it ? |i Lh_ih Lu 2 @?_ f.c hitTiU|i*)
N?uLh|?@|i*)c |i iU|Lh Lu hit_@*t uLh |iti uLh4*@|L?t i M| tih@* ULhhi*@|L?

22
, TLh| L?|i}h@|L? +it*|t | oR%@?@_@
4Mih Lu *@}t W?U*_i_
b| H . S D e 2
L?|i}h@|L? ViU|Lht  f f f f f f f
hUi,*@t|U|) fH ? ? ? ? ? ? ?
W?UL4i ,*@t|U|) fH2 ? ? ? ? ? ? ?
wL@_?} LiUi?| f2. ? ? ? ? ? ? ?
5)t|i4<t + 2 fbf fHb fHH fH. fH. fHS fH fH2
, TLh|t< 5ih@* Lhh fS fff fD f fH feb fD f.H
5)t|i4<t 5ih@* Lhh ff. ff8 ff8 fff8 ffH f ff28 ff28

, TLh| L?|i}h@|L? +it*|t | oeeo@?@_@
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht    f f f f f
hUi,*@t|U|) f. fSD fSH ? ? ? ? ?
W?UL4i ,*@t|U|) 2f. 2f. 2fS ? ? ? ? ?
wL@_?} LiUi?| ff2 f2f f2 ? ? ? ? ?
5)t|i4<t +2 fbD fbe fbe fbe fbe fbe fb fb
, TLh| 5ih@* Lhh ffH ff8 feD ffS fHD f 2 feD fSS
5)t|i4<t 5ih@* Lhh ff 8 fff8 ff28 fff8 ff8 ff8 fD8 ff8

Ai UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
f2. Ef2   %
^5 ' C f2fb EffD D  fH2 fHD C s + D cb.H2bbee
kq 

E?@ EffH Effe
f. Ef  oR% 

U tLt t}?€U@?| *L?}h? i*@t|U|it uLh ?UL4i @?_ ThUit M| @? ?t}?€U@?|
ihhLhULhhiU|L? |ih4 Ai bDI UL?€_i?Ui M@?_t uLh |i L|t@4T*i Thi_U|L?t @hi
tL? ? €}hi 2 +iUhti L |it|t @hi tL? ? €}hi @?_c |L} |i
T@h@4i|ihUL?t|@?U) |it|t t}}it| t|@M*i i*@t|U|it |hL} bb c |i hit*|t TL?| |L
@ t}?€U@?| U@?}i ? |Lti i*@t|U|it t|@h|?} ? bbec @t i_i?Ui_ M) |i UhLtt?}
Lu |i Lh3L?|@* _@ti_ *?i _i?L|?} @ hiiU|L? Lu |i )TL|itt Lu T@h@4i|ih
UL?t|@?U) @| |i €iTihUi?| *ii*

2
5.65 1-step cx
Forecast

5.6

5.55

5.5

5.45

5.4

5.35

1994 1995 1996 1997

6}hi 2G hi_U|iUUh@U)L?|i}h@|L?, TLh|t@?@_@

2
1up cx 5% 1up CHOWs 5%
1.5

1
1

.5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup cx 5% Nup CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn cx 5% 1.5 Ndn CHOWs 5%
2

1.5
1
1

.5 .5
1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi G L Ait|tL?|i}h@|L?, TLh|t@?@_@

2e
?i u@U|Lh |@| 4}| @UUL?| uLh |t Mhi@!_L? t |i ?|hL_U|L? Lu 6A
i@h*) ? bbe AL i @4?i |t TLttM*|)c i hiit|4@|i |i t)t|i4 | _@|@
|hL} bb @?_ |it| uLh |i t|@M*|) Lu |i *L?}h? i*@t|U|it Ai hiit|4@|L?
hit*|tc tL? Mi*Lc hii@* |@| |i i U*tL? Lu |i TLt|6A TihL_ uhL4 it
|4@|L? U@?}it t}?€U@?|*) |i it|4@|i_ tTii_ Lu @_t|4i?|c ML| ? t|@|t|U@*
t}?€U@?Ui @?_ iUL?L4U ?|ihThi|@|L? Ai hiit|4@|i_ ?UL4i i*@t|U|) t @ M| 
}ih @?_ |i LTTLt|i L*_t uLh |i hiit|4@|i_ ThUi i*@t|U|)G
3 4 3 4
f.bb Ef2e   %
^5 ' C f2be Eff. D  fDe fHD C s+ Dc b.H2bb e
kq 

E?@ EffS. EffSS
fe EfH oR%

Ai TLt|bb Thi_U|L?t tL |@| @U|@* i TLh|t @hi t}?€U@?|*) }ih |@? 
@| i TLh|t L*_ @i Mii? ? |i @Mti?Ui Lu 6A E€}hi e

5.6 1-step cx
Forecast

5.55

5.5

5.45

5.4

5.35

5.3

1993 1994 1995 1996 1997

6}hi eG hi_U|i UUh@U)  L?|i}h@|L? Thibbe  , TLh|t@?@_@

2D
1 1
1up cx 5% 1up CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1 1990 1991 1992 1993 1994
Nup cx 5% Nup CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1 1990 1991 1992 1993 1994
Ndn cx 5% Ndn CHOWs 5%

.5
.5

1990 1991 1992 1993 1994 1990 1991 1992 1993 1994

6}hi DG L Ait|t  L?|i}h@|L? Thi @u|@  , TLh|t  @?@_@ 

L |it|t M@ti_ L? |i Thi6A it|4@|it tL ?L i_i?Ui Lu T@h@4i|ih ?
t|@M*|) E€}hi D At hit*| UL?€h4t |i ttTUL? |@| |i i@h*ih u@*hit Lu |t
|it| t|i4 uhL4 |i ?|hL_U|L? Lu 6A

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} @ 6A _44) @h@M*i |@| |@!it @ 
@*i Lu L?i t|@h|?} ? bbe Ai it|4@|L? hit*|t @hi

{%| ' nfSSD{s +| fe.D 2{oR%| nffefD8 A | f2fH.%c| 3 
Ere Ef e EfD Eff  Eff.D 
ihi .% ' %fDe s + nfHDoR%n?|eoSeR| @?_ re t|@?_t uLh t|@?_@h_ ihhLh

-2 ' fD( 7.- ' 2DI ** O)TL|itt ET@*i
5@4T*iG b.S2bbee 5ih@*W?_iTi?_i?Ui Ef2D Lh4@*|) EfD 
OL4Lt!i_@t|U|) Eff. 6?U 6Lh4 Efbf
Ai 4L_i* i T*@?t @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu i TLh|t @?_
|i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_ uLh
it|4@|L? Ai Thi_U|L?t Lu |i ihhLhULhhiU|L? 4L_i* _L ?L| tL @ |i?_i?U)
|L Mi L?it_i_ |L} |i @h@M*i Mi?} Thi_U|i_ t |i }hL| h@|i E€}hi S

2S
6?@**)c |i L |it|t E€}hi . @?_ ULiUi?| it|4@|it E€}hi H uhL4 |i ihhLh
ULhhiU|L? 4L_i* tTTLh| T@h@4i|ih UL?t|@?U)

Fitted dcx

.05

0

-.05
1980 1985 1990 1995

Fitted dcx
Forecast

.05

0

-.05
1994 1995 1996 1997

6}hi SG hi_U|i UUh@U),, TLh|t@?@_@

2.
1 1up CHOWs 5%

.5

1990 1991 1992 1993 1994 1995
1 Ndn CHOWs 5%

.75

.5

1990 1991 1992 1993 1994 1995
1 Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi .G L Ait|t  , , TLh|t@?@_@

2 dcfy

1.5

1

.5

1990 1991 1992 1993 1994 1995
0 dcrpx

-.25

-.5

-.75

1990 1991 1992 1993 1994 1995
0 cxECM_1

-.1

-.2

-.3

1990 1991 1992 1993 1994 1995

6}hi HG bDI @?_t uLh , LiUi?|t  , TLh|t@?@_@

2H 
@?@_@? W4TLh|t

wL?}h? 6LhUit i@th?} ThUit @t |i 4TLh| ThUi hi*@|i |L |i B#
_i@|Lh EoR6 )i*_t it|4@|i_ i*@t|U|it uLh @?@_@? 4TLh|t |@| @hi ?L| hLMt|
|L |i ULUi Lu *@} Ai @Mti?Ui Lu UL?|i}h@|L? t |i i UiT|L? h@|ih |@? |i
h*i @?_ |i UL?|i}h@|L? ULiUi?|t @h) UL?t_ih@M*) |L U@?}it ? |i ?4Mih Lu
*@}t i UiT| uLh t)t|i4t | H @?_ S *@}t i@th?} ThUit @t |i W6<t oeeo hii@*t
?L UL?|i}h@|L? @t |i h*i( uLh |i |L U@tit | UL?|i}h@|L? |i hit*|t TL?| |L
i|ih ?hi@tL?@M*) *@h}i Lh ?@*_*) t}?i_ it|4@|it
W4TLh| L?|i}h@|L? +it*|t | oR6@?@_@
4Mih Lu *@}t W?U*_i_
b H| . S D e 2
L?|i}h@|L? ViU|Lht f  f     
hUi,*@t|U|) ? f ? fH  D 2H . f
W?UL4i ,*@t|U|) ?  S ? 2e f.e Sf ef2 .
wL@_?} LiUi?| ? f2f ? ffS fff ff fff ff
5)t|i4<t +2 fbD fbe fbe fbe fbe fbe fb fb
W4TLh|<t 5ih@* Lhh f2D ffe8 fS fD f S f ffH fDD
5)t|i4<t 5ih@* Lhh fSf fe f f fD fDH fD f2D f

W4TLh| L?|i}h@|L? +it*|t | oeeo@?@_@
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht  2  f f f f f
hUi,*@t|U|) DD.f ? fb2 ? ? ? ? ?
W?UL4i ,*@t|U|) S ? 2eD ? ? ? ? ?
wL@_?} LiUi?| fff ? ffH ? ? ? ? ?
5)t|i4<t + 2 fbS fbS fbS fbS fbD fbD fbD fbD
W4TLh|<t 5ih@* Lhh f.b fbe f2H ff8 f  f2 fe fef
5)t|i4<t 5ih@* Lhh feb fDH f.H f. f.D ff ff. ffe

Ai UL?|i}h@|L? hit*|t t?} oR6 @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
f2fS EffD   6
^5 ' C ffe Eff2 D   D. ffD C
kq 
+ D c bS bbee
E?@ Eff. Ef.e
ffH Eff  oR6 
U tLt t}?€U@?| *L?}h? i*@t|U|it uLh ?UL4i @?_ ThUit @?_ @ t}?€U@?|
ihhLhULhhiU|L? |ih4 Ai L|t@4T*i Thi_U|L?t M@ti_ L? |iti it|4@|it @hi tL? 
? €}hi b @?_ |i hiUhti L |it|t @hi tL? ? €}hi f AL} |i T@h@4i|ih
UL?t|@?U) |it|t t}}it| t|@M*i i*@t|U|it |hL} bb c |i hit*|t TL?| |L @ Mhi@!
_L? ? |Lti i*@t|U|it t|@h|?} ? bbe

2b
1-step cm
Forecast
5.6

5.55

5.5

5.45

5.4

1994 1995 1996 1997

6}hi bG hi_U|i UUh@U)  L?|i}h@|L?  W4TLh|t  @?@_@

1 1up cm 5% 1 1up CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
1 Nup cm 5%
1 Nup CHOWs 5%

.75
.5

.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn cm 5%
1 Ndn CHOWs 5%
1

.75
.8

.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi fG L Ait|tL?|i}h@|L?W4TLh|t@?@_@
t ? |i U@ti Lu i TLh|tc i i @4?i i|ih |t Mhi@!_L? t|i4t uhL4 |i 
?|hL_U|L? Lu 6A i@h*) ? bbe AL i @4?i |t TLttM*|)c i hiit|4@|i_ |i
t)t|i4 | _@|@ |hL} bb @?_ |it|i_ uLh |i t|@M*|) Lu |i *L?}h? i*@t|U|it
Ai UL?|i}h@|L? hit*|t @hi

f
3 4 3 4
f 2. Eff.   6
^5 ' C ffSH Eff2 D   b2 fHeD C + D c bS bb e
kq 

E?@ EffeD Efe
ffb Effe oR6

Ai hit*|t hii@* |@| |i i U*tL? Lu |i TLt|6A TihL_ uhL4 it|4@|L?
h@tit t}?€U@?|*) |i it|4@|i_ tTii_ Lu @_t|4i?| Ai hiit|4@|i_ ?UL4i i*@t
|U|) hi4@?t ?U@?}i_ M| |i ThUi i*@t|U|) ?Uhi@tit E? @MtL*|i |ih4t @ M|
6}hi  tLt |@| |i i U*tL? Lu |i 6A TihL_ ThL_Uit @ t)t|i4@|U ?
_ihThi_U|L? Lu 4TLh|t _h?} |i 6A TihL_ @?_ |t LMtih@|L? UL?€h4t |i
Mi*iu |@| |i |h@_i @}hii4i?| 4}| @i U@?}i_ ?UL4i @?_ ThUi i*@t|U|it uLh 
@?@_@? |h@_i 6}hi 2 tLt ?_ii_ |@| ThLh |L |t |h@_i @}hii4i?|c |iti
i*@t|U|it UL*_ Mi |hi@|i_ @t UL?t|@?|tc @t hiiU|i_ ? ?t}?€U@?| L |it|t

5.55 1-step cm
Forecast

5.5

5.45

5.4

5.35

5.3

1993 1994 1995 1996

6}hi G hi_U|i UUh@U)L?|i}h@|L?W4TLh|t Thi @u|@@?@_@


1 1up cm 5% 1up CHOWs 5%
1

.5
.5

1990 1991 1992 1993 1994 1990 1991 1992 1993 1994
1 Nup cm 5%
1 Nup CHOWs 5%

.75
.5

.5

1990 1991 1992 1993 1994 1990 1991 1992 1993 1994
1 Ndn cm 5%
1 Ndn CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1990 1991 1992 1993 1994

6}hi 2G L Ait|tL?|i}h@|L?W4TLh|t Thi@u|@@?@_@

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} @ 6A _44) @h@M*i |@| |@!it @ 
@*i Lu L?i t|@h|?} ? bbe ?|* |i i?_ Lu |i t@4T*i Ai hit*|t @hi

{6| ' n2D.S{+| f D2{oR6| nff SD8 A | ffDb.6c| 
3

Ere Ef2 EfS EffD Eff . 
ihi .6 ' 6   b2  _+ n fHeDoR6 n ?|eoSeR|

-2 ' fee( 7.- ' 2..I ** O)TL|itt ET@*i
5@4T*iG bS2bbee 5ih@*W?_iTi?_i?Ui Efb. Lh4@*|) Eff8
OL4Lt!i_@t|U|) Ef.b 6?U 6Lh4 Ef H
Ai 4L_i* i T*@?t t| ?_ih @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t
@?_ |i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_
uLh it|4@|L? i UiT| ?Lh4@*|) N?*!i |i Thi_U|L?t Lu |i UL?|i}h@|L? t)t|i4c
|i Thi_U|L?t Lu |i ihhLhULhhiU|L? 4L_i* _L ?L| tL @ |i?_i?U) |L Mi L?it_i_
E€}hi   |L} |i @h@M*i Mi?} Thi_U|i_ t |i }hL| h@|i 6?@**)c |i L
|it|t E€}hi e @?_ ULiUi?| it|4@|it E€}hi D uhL4 |i ihhLh ULhhiU|L? 4L_i*
tTTLh| T@h@4i|ih UL?t|@?U)

2
.1 Fitted dcm

.05

0

-.05

1965 1970 1975 1980 1985 1990 1995

Fitted dcm
Forecast
.05

0

1994 1995 1996 1997

6}hi  G hi_U|i UUh@U),W4TLh|t@?@_@

1 1up CHOWs 5%

.5

0
1989 1990 1991 1992 1993 1994 1995
1 Ndn CHOWs 5%

.5

1989 1990 1991 1992 1993 1994 1995
1 Nup CHOWs 5%

.5

1989 1990 1991 1992 1993 1994 1995

6}hi eG L Ait|t, LiUi?|t  W4TLh|t @?@_@


dcrpm

0

-.5
1989 1990 1991 1992 1993 1994 1995
dcy
1.5

1

1989 1990 1991 1992 1993 1994 1995
cmECM_1
-.05

-.1

-.15

-.2
1989 1990 1991 1992 1993 1994 1995

6}hi DG bDI @?_t uLh , LiUi?|tW4TLh|t@?@_@

6 6hi?U Ah@_i
Ai iL*|L? Lu 6h@?Ui<t uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _tT*@)i_ 
? €}hi S L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} | uLhi}? @?_
_L4it|U ?UL4i +i*@|i ThUit uLh 4TLh|t tL @ _L?@h_ |hi?_ |L @ }hi@|ih
i |i?| |@? i TLh|t< hi*@|i ThUit W? @__|L?c |i W6<t 4i@thi Lu |i hi@*
igiU|i i U@?}i h@|i tLt t4@**ih L*@|*|) |@? |i UL?i?|L?@* 4i@thi Lu
hi*@|i ThUit M@ti_ L? _i@|Lht uhL4 |i @|L?@* W?UL4i UUL?|t

e
Export Volume 12.5 Import Volume
12.5

12 12

11.5
11.5
11
1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
8.4 Foreign GDP Domestic GDP
13.75

8.2 13.5

13.25
8

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Export Prices IMF’s Reer Import Prices
0 0
IMF’s Reer
-.25 -.25
Price Ratio
Price Ratio
-.5 -.5
1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi SG Ah@_ic W?UL4ic @?_ hUitG 6h@?Ui

6hi?U , TLh|t

wL?}h? 6LhUit i@th?} ThUit @t oR% )i*_t UL?|i}h@|L? uLh uLh4*@|L?t 
?U*_?} *@}t ? i Uitt Lu uLh ^@h|iht M| |i ThUi i*@t|U|) t TLt|i 6Lh *@}t
uiih |@? uLh ^@h|ihtc |i UL?|i}h@|L? hit*|t TL?| |L it|4@|it Lu ?UL4i @?_
ThUi i*@t|U|it Lu D @?_ f c hitTiU|i*) i@th?} ThUit | |i oeeo )i*_t
?L UL?|i}h@|L? uLh t)t|i4t ?U*_?} 4Lhi |@? |hii *@}t 6Lh |i |L U@tit |
UL?|i}h@|L?c |i hit*|t TL?| |L hi*@|i*) } ThUi i*@t|U|it E? i Uitt Lu |L ?
@MtL*|i @*i @?_ ?UL4i i*@t|U|it Lu L?i At |i ULUi Lu 4i@thi Lu hi*@|i
ThUi )i*_t @ h@|ih _gihi?| U@h@U|ih3@|L? Lu 6hi?U i TLh|t

, TLh| L?|i}h@|L? +it*|t | oR% 6h@?Ui
4Mih Lu *@}t W?U*_i_
b H . S D e 2|
L?|i}h@|L? ViU|Lht      2  
hUi,*@t|U|) fS2 fSD fe fDH e2 ? f f f2
W?UL4i ,*@t|U|) Hf Hf .2 .H S ? e. eb
wL@_?} LiUi?| fb fD f2e fe ff ? ff ffS
5)t|i4<t +2 fbD fbD fbe fb fb2 fb2 fbf fHb
, TLh|<t 5ih@* Lhh fDD f feH fef ffD f ff. ff8
5)t|i4<t 5ih@* Lhh f. f f. f2e f  f.e feH f.

D
, TLh| L?|i}h@|L? +it*|t | oeeo 6h@?Ui
4Mih Lu *@}t W?U*_i_
b H . S D e | 2
L?|i}h@|L? ViU|Lht f f f f f f  2
hUi,*@t|U|) ? ? ? ? ? ?  e2 2be
W?UL4i ,*@t|U|) ? ? ? ? ? ? fbD2 fbS
wL@_?} LiUi?| ? ? ? ? ? ? ffS ffH
2
5)t|i4<t + fbe fb fb fb2 fb2 fb fb fbf
, TLh|<t 5ih@* Lhh f. fe2 fb2 fHb f.D fef fe fD
5)t|i4<t 5ih@* Lhh f D ff. fe2 f  fSb fSS f. fDS

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai _i|@*i_ UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
ffSb Effe   %
^5 ' C ff. Eff D  eb f2e C s + D c b.S bbee
kq 

E?@ Eff.b Effbf
ffe. Eff. oR% 

ihi@t |i UL?|i}h@|L? hit*|t t?} oeeo @hi
3 4 3 4
ff.2 Eff    %
^5 ' C ff . Eff D  fbD2 e2 C s + D c b.Sebbee
kq

E?@ Ef2fD EfHHS
ffe2 Eff2 oeeo

Ai hit*|t ?_U@|i |@| hi*@?Ui L? |i UL?i?|L?@* oR% ?_iht|@|itc M) @ tM
t|@?|@* 4@h}?c |i ThUi hitTL?ti?itt Lu 6hi?U i TLh|t hi*@|i |L |i W6<t oeeo
LhiLihc |i ihhLhULhhiU|L? |ih4 t ?L| t|@|t|U@**) t}?€U@?| uLh oR% U }it
@ t|@|t|U@* i_}i |L |i uLh4*@|L? t?} oeeo 6}hit . @?_ H Mi*L UL4T@hi
|i i TLt| Thi_U|L?t t?} |i |L 4i@thit Lu hi*@|i ThUit( €}hit b @?_ 2f
hiTLh| |i @hLt L |it|t uLh i@U 4i@thi Lu hi*@|i ThUit W?tTiU|L? Lu |t
i_i?Ui }it @ t*}| i_}i |L |i t)t|i4 t?} oeeo @t |i 4i@thi Lu hi*@|i ThUit
AL} hi*@?Ui L? |t 4i@thi hit*|t ? t*}|*) }ih uLhiU@t| ihhLhtc hiiU|L?t
Lu |i L |it|t @hi UL?t_ih@M*) uiih |@? t?} |i oR% 4i@thi

S
12.6 1-step fx
Forecast

2.575

12.55

2.525

12.5

2.475

12.45

2.425

1994 1995 1996 1997

6}hi .G hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oR%6h@?Ui

1-step fx
Forecast

12.55

2.525

12.5

2.475

12.45

2.425

1994 1995 1996

6}hi HG hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oeeo6h@?Ui

.
2 1up fx 5% 1up CHOWs 5%
1.5
1.5
1
1

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Nup fx 5% 1.4 Nup CHOWs 5%

1.5
1.2

1 1

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn fx 5% Ndn CHOWs 5%
1 1

.75
.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi bG L Ait|tL?|i}h@|L?, TLh|t | oR%6h@?Ui

1up fx 5%
1 1up CHOWs 5%
1.5

1
.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Nup fx 5% Nup CHOWs 5%

.8
1

.6

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn fx 5% Ndn CHOWs 5%
1.5
.8

1
.6

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi 2fG L Ait|tL?|i}h@|L?, TLh|t | oeeo6h@?Ui

H
5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} |L _44) @h@M*it uLh bbf @?_ bbf2
|L UL?|hL* uLh |i Bih4@? hi?€U@|L? igiU|t L? 6hi?U i TLh|t Ai it|4@|L?
hit*|t t?} oR% @hi

{%| ' nH2{s +| ffb2{oR%| fffe.%c| 
3
c
Ere Efe  EffS Effe
ihi .% ' %  eb  s + n f2e  oR% n ?|eoSeR|

-2 ' fD2( 7.- ' SbI ** O)TL|itt ET@*i
5@4T*iG b.S bbee 5ih@*W?_iTi?_i?Ui Ef2 Lh4@*|) Ef.H
OL4Lt!i_@t|U|) EfHe 6?U 6Lh4 EfH2

Ai it|4@|L? hit*|t t?} oeeo @hi

{%| ' nfbbe{s +| f22e{oeeo| ff.H.%c| 
3
c
Ere Ef2b EffH Eff2
ihi .% ' %  fbD2  s + n e2  oeeo n ?|eoSeR|

-2 ' fDe( 7.- ' DI ** O)TL|itt ET@*i
5@4T*iG b.S bbee 5ih@*W?_iTi?_i?Ui Efbe Lh4@*|) Ef2e
OL4Lt!i_@t|U|) EfSH 6?U 6Lh4 EfD 
L| uLh4*@|L?t i T*@? @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu i TLh|t
@?_ |i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_ uLh
it|4@|L? L|Uic Liihc |@| |i ihhLhULhhiU|L? ULiUi?| uLh |i uLh4*@|L? 
t?} oR% t ?L| t}?€U@?|*) _gihi?| uhL4 3ihL At hit*| i@!i?t |i i_i?Ui
L? UL?|i}h@|L? uLh |i t)t|i4 hi*)?} L? oR%
N?*!i |i Thi_U|L?t Lu |i UL?|i}h@|L? t)t|i4c |i Thi_U|L?t Lu |i ihhLh
ULhhiU|L? 4L_i* _L ?L| tL @ |i?_i?U) |L Mi L?it_i_ E€}hit 2 @?_ 22 |L}
|i @h@M*i Mi?} Thi_U|i_ t |i }hL| h@|i L|Uic Liihc |@| |i L|Lu
t@4T*i Thi_U|L?t Lu |i uLh4*@|L? t?} oR% @hi Lhti |@? |Lti Lu oeeo

b
Fitted dfx
.05

0

1980 1985 1990 1995
.05
Fitted dfx
Forecast

.025

0

-.025

1994 1995 1996 1997

6}hi 2G hi_U|i UUh@U), LiUi?|t, TLh|t | oR%6h@?Ui

Fitted dfx
.05

0

1980 1985 1990 1995

Fitted dfx
Forecast
.025

0

-.025

1994 1995 1996

6}hi 22G hi_U|i UUh@U), LiUi?|t, TLh|t | oeeo6h@?Ui

6?@**)c |i L |it|t @?_ |i bDI UL?€_i?Ui M@?_t uLh |i ULiUi?| it|4@|it
tTTLh| |i )TL|itt Lu T@h@4i|ih UL?t|@?U) E€}hit 2 2S

ef
1 1up CHOWs 5%

.5

1990 1991 1992 1993 1994 1995
1 Ndn CHOWs 5%

.75

.5

1990 1991 1992 1993 1994 1995
1 Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi 2 G L Ait|t, LiUi?|t, TLh|t | oR%6h@?Ui

1up CHOWs 5%
1.5

1

.5

0
1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

1.5

1

1990 1991 1992 1993 1994 1995
1 Nup CHOWs 5%

.5

0
1990 1991 1992 1993 1994 1995

6}hi 2eG L Ait|t, LiUi?|t, TLh|t | oeeo6h@?Ui


1.5 dffy 1.5 dffy_1

1 1

.5 .5

1990 1995 1990 1995

dfrpx fxECM_1
0
.05

-.1
0

-.2
-.05

-.3
1990 1995 1990 1995

6}hi 2DG bDI @?_t uLh , LiUi?|t, TLh|t | oR%6h@?Ui

0
Constant 0 dfx_1

-.01 -.2
-.4
1990 1995 1990 1995

0 dfx_2 1 dffy

-.2 .5
-.4 0
1990 1995 1990 1995
1.5 0
dffy_1 dfreerw
1 -.2
.5
-.4
0
1990 1995 1990 1995
-.05
fxECMI_1
-.1
-.15
-.2
1990 1995

6}hi 2SG bDI @?_t uLh , LiUi?|t, TLh|t | oeeo6h@?Ui

e2
6hi?U W4TLh|t

wL?}h? 6LhUit i@th?} hi*@|i ThUit @t |i 4TLh| ThUi hi*@|i |L |i
B# _i@|Lh )i*_t ?L UL?|i}h@|L? uLh t)t|i4t t?} 4Lhi |@? uLh *@}t 6Lh
t)t|i4t i M|?} UL?|i}h@|L?c |i ThUi i*@t|U|it @hi ? |i Lh_ih Lu fe @?_ |i 
?UL4i i*@t|U|it @hi ? |i Lh_ih Lu S i@th?} hi*@|i ThUit | |i W6<t
hi@* igiU|i i U@?}i h@|i hii@*t |@|c uLh |i |L U@tit ihi |ihi t UL?|i}h@|L?c 
?UL4i @?_ ThUi i*@t|U|it @hi *@h}i i?L} |L ^it|L? |ih hi*@M*|)

W4TLh| L?|i}h@|L? +it*|t | oR66h@?Ui
4Mih Lu *@}t W?U*_i_
b H . S D e | 2
L?|i}h@|L? ViU|Lht f f f f f   
hUi,*@t|U|) ? ? ? ? ? f D f . f H
W?UL4i ,*@t|U|) ? ? ? ? ? S Db Db
wL@_?} LiUi?| ? ? ? ? ? fS fSf fe.
5)t|i4<t +2 fb2 fb2 fb fb fbf fHb fHb fHH
W4TLh|<t 5ih@* Lhh fff8 ff28 ffH8 f 2 fS fH ffH ff 8
5)t|i4<t 5ih@* Lhh ffb f. ff. fff8 ff ff28 f2 ff8

W4TLh| L?|i}h@|L? +it*|t | oeeo6h@?Ui
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht f f f f f   2
hUi,*@t|U|) ? ? ? ? ? DfH fb ?
W?UL4i ,*@t|U|) ? ? ? ? ? fb.  D ?
wL@_?} LiUi?| ? ? ? ? ? fff fff ?
5)t|i4<t + 2 fb fb fbf fbf fbf fbf fHH fHH
W4TLh|<t 5ih@* Lhh ffH ffe8 ff28 f fD. ffe8 fD fef
5)t|i4<t 5ih@* Lhh ff8 fH f f22 f ffe8 ff28 f

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai UL?|i}h@|L? hit*|t t?} oR6 @hi Et|@?_@h_ ihhLht ? T@hi?|ititG

3 4 3 4
fSf Effb   6
^5 ' C ffb Ef  D  DbD f Sb C + D c b.22bbee
kq 

E?@ Eff2S Eff 2
ffHS Eff  oR6

Ai L|Lut@4T*i Thi_U|L?t uhL4 |i UL?|i}h@|L? t)t|i4 hii@* @ hi@tL?@M*i _i
}hii Lu Thi_U|i @UUh@U) E€}hi 2. LhiLihc L |it|t uLh |i UL?|i}h@|L?

e
t)t|i4 U@??L| hiiU| |i )TL|itt Lu T@h@4i|ih UL?t|@?U) uLh |i *L?}h? i*@t|U 
|it E€}hi 2H

1-step fm
Forecast
2.575

12.55

2.525

12.5

2.475

12.45

1994 1995 1996 1997

6}hi 2.G hi_U|i UUh@U)L?|i}h@|L?W4TLh|t6h@?Ui

1 1up fm 5%
1 1up CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
1 Nup fm 5%
1 Nup CHOWs 5%

.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
1 Ndn fm 5%
1 Ndn CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi 2HG L Ait|t  L?|i}h@|L?  W4TLh|t  6h@?Ui

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i*G

ee
{6| ' nSeD{+| ffDDb{oR6| f D2.6c| 
3

Ere Efef Efe Eff. 
ihi .6 ' 6  DbeS  + n f SHbH  oR6

-2 ' fS.( 7.- ' S I ** O)TL|itt ET@*i
5@4T*iG b. bbee 5ih@*W?_iTi?_i?Ui Ef2 Lh4@*|) Ef.e
OL4Lt!i_@t|U|) Ef2e 6?U 6Lh4 EfD
Ai 4L_i* i T*@?t |L|h_t Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t @?_
|i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_ uLh
it|4@|L? w!i |i Thi_U|L?t Lu |i UL?|i}h@|L? t)t|i4c |i Thi_U|L?t Lu |i
ihhLhULhhiU|L? 4L_i* @hi ?L| L?it_i_ E€}hi 2b 6?@**)c |i L |it|t E€}hi
f @?_ |i bDI UL?€_i?Ui M@?_t uLh |i ,<t ULiUi?| it|4@|it E€}hi 
t}}it| @ hi4@h!@M*i _i}hii Lu UL?t|@?U) Lih |t TihL_

Fitted dfm

.05

0

-.05

1975 1980 1985 1990 1995
.05 Fitted dfm
Forecast

.025

0

-.025

1994 1995 1996 1997

6}hi 2bG hi_U|i UUh@U), W4TLh|t  6h@?Ui

eD
1 1up CHOWs 5%

.5

1990 1991 1992 1993 1994 1995
1 Ndn CHOWs 5%

.5

1990 1991 1992 1993 1994 1995
1 Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi fG L Ait|t, W4TLh|t  6h@?Ui

dfrpm dfrpm_1 .2 dfrpm_2
0 .3
.1
-.1 .2 0
-.2 .1 -.1
1990 1995 1990 1995 1990 1995
.2
dfrpm_3 .1 dfrpm_4 0 dfrpm_5
.1
0
0 -.1
-.1
-.1 -.2
-.2
1990 1995 1990 1995 1990 1995
0
2.5 dfy 1 dfy_3 dfy_5
-.5
2 .5 -1
1.5
0 -1.5
1990 1995 1990 1995 1990 1995

-.2 fmECM_1 -2 Constant

-.4 -4

1990 1995 1990 1995

6}hi G bDI @?_t uLh , LiUi?|tW4TLh|t6h@?Ui

B Bih4@? Ah@_i
Ai iL*|L? Lu Bih4@?)<t uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _t
T*@)i_ ? €}hi 2 L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} |

eS
uLhi}? @?_ _L4it|U ?UL4i +i*@|i ThUit uLh 4TLh|t tL @ _L?@h_ |hi?_ 
ihi@t i TLh|t< hi*@|i ThUit tL *itt Lu @ |hi?_ W? @__|L?c |i W6<t hi@*
igiU|i i U@?}i h@|i tLt t4@**ih L*@|*|) |@? |i UL?i?|L?@* 4i@thi Lu hi*
@|i ThUit M@ti_ L? _i@|Lht uhL4 |i @|L?@* W?UL4i UUL?|t

5.5 Export Volume Import Volume

5
5

4.5
4.5

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
9.2 6.75
Foreign GDP Domestic GDP
6.5
9
6.25
8.8 6

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Export Prices IMF’s Reer Import Prices IMF’s Reer

0 0

Price Ratio
-.5 Price Ratio -.5

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi 2G Ah@_ic W?UL4ic @?_ hUitG Bih4@?)

Bih4@? , TLh|t

wL?}h? 6LhUit i@th?} ThUit | oR% )i*_t UL?|i}h@|L? iU|Lht |@|
@hi ?L| hLMt| |L |i ULUi Lu *@} 5TiU€U@**)c t)t|i4t t?} uiih |@? i}| *@}t
@?_ 4Lhi |@? |L *@}t _L ?L| i M| UL?|i}h@|L? 6Lh |i U@tit ihi UL?|i}h@
|L? i t|tc |i it|4@|i_ ThUi i*@t|U|) h@?}it uhL4 f22 |L f2. @?_ |i ?UL4i
i*@t|U|) t Ui?|ihi_ L? D i@th?} ThUit | |i W6<t oeeo hii@*t UL?|i}h@
|L? ? |hii ?t|@?Uit @?_ |i @ttLU@|i_ ThUi i*@t|U|it @hi @ML| 4?t L?i @?_
|i ?UL4i i*@t|U|it @hi @ML| |L Aiti uLh4*@|L?t @hi t|@|t|U@**) t@|tu@U|Lh)
@?_ ThL_i @ h@|ih _gihi?| U@h@U|ih3@|L? Lu |i Mi@Lh Lu Bih4@? i TLh|t

, TLh| L?|i}h@|L? +it*|t | oR%Bih4@?)
4Mih Lu *@}t W?U*_i_
b H . S D e 2|
L?|i}h@|L? ViU|Lht   f f f f f 
hUi,*@t|U|) f2. f22 ? ? ? ? ? f2S
W?UL4i ,*@t|U|) S2 Se ? ? ? ? ? e
wL@_?} LiUi?| f H f S ? ? ? ? ? ff
5)t|i4<t +2 fb. fb. fbS fbS fbS fbS fbS fbS
, TLh|<t 5ih@* Lhh fDH f.f fSe f feS feD f. f2H
5)t|i4<t 5ih@* Lhh fbb fb fHe f . fD. fHS fbb fbb

e.
, TLh| L?|i}h@|L? +it*|t | oeeoBih4@?)
4Mih Lu *@}t W?U*_i_
b H . S D e | 2
L?|i}h@|L? ViU|Lht f  f f f   2
hUi,*@t|U|) ? fbf ? ? ? fH  ?
W?UL4i ,*@t|U|) ? 2fH ? ? ? 2. 22 ?
wL@_?} LiUi?| ? fbH ? ? ? f e f f ?
2
5)t|i4<t + fbD fbD fbe fbe fbe fbe fb fb
, TLh|<t 5ih@* Lhh fSe feH fD. ff fS2 fb2 fbD fbe
5)t|i4<t 5ih@* Lhh fS. f f fe. fSe fHf f.D fb.

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai _i|@*i_ UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
fff EffD   %
^5 ' C ff . Eff. D  e f2DD C s + D c b.H2bbee
kq 

E?@ Ef D Effb.
ffeH Eff oR% 

ihi@t |i UL?|i}h@|L? hit*|t t?} oeeo @hi

3 4 3 4
f H Ef   %
^5 ' C ff.2 Eff  D  22 e 2b C s + D c b.Hbbee
kq 

E?@ EfS EfDD
ffH Eff. oeeo

Ai hit*|t ?_U@|i |@| hi*@?Ui L? oR% ?_iht|@|itc M) @ tMt|@?|@* 4@h}?c |i
hitTL?ti?itt Lu Bih4@? i TLh|t |L U@?}it ? ML| ?UL4i @?_ ThUit UL4T@hi_ |L
hi*@?Ui L? oeeo
W?tTiU|L? Lu |i i TLt| Thi_U|L? ihhLht uLh i TLh|t t}}it|t |@| hi*@?Ui L?
oR% }it t4@**ih uLhiU@t| ihhLht |@? t?} oeeo E€}hit @?_ eG

eH
5.4 1-step gx
Forecast

5.35

5.3

5.25

5.2

1994 1995 1996 1997

6}hi G hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oR%Bih4@?)

1-step gx
5.325 Forecast

5.3

5.275

5.25

5.225

5.2

5.175
1994 1995 1996 1997

6}hi eG hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oeeoBih4@?)

N?uLh|?@|i*)c hi*@?Ui L? i|ih 4i@thi uLh hi*@|i ThUit t}}it|t T@h@4i|ih 
?t|@M*|) E€}hi D @?_ S

eb
1up gx 5%
2 1up CHOWs 5%
3
1.5
2
1
1 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Nup gx 5% Nup CHOWs 5%
3
1.5

2
1
1
1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn gx 5% Ndn CHOWs 5%
2
1

1 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi DG L Ait|tL?|i}h@|L?, TLh|t | oR%Bih4@?)

4 1up gx 5% 1up CHOWs 5%
3

2
2
1

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
4 Nup gx 5%
2 Nup CHOWs 5%

3 1.5
2
1
1
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn gx 5% Ndn CHOWs 5%
2
1

1
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi SG L Ait|tL?|i}h@|L?, TLh|t | oeeoBih4@?)

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} _44) @h@M*it uLh bbfc bbf c @?_
bbfe |L UL?|hL* uLh |i Bih4@? hi?€U@|L? igiU|t Ai it|4@|L? hit*|t t?}

Df
oR% @hi

{%| ' nfDe.{s +| ffD {oR%| fe.S.%c| 
3
c
Ere Efe EffS Eff.
ihi .% ' %  e  s + n f2DD  oR% n ?|eoSeR|

-2 ' fD.( 7.- ' 2 fI ** O)TL|itt ET@*i
5@4T*iG b.S2bbee 5ih@*W?_iTi?_i?Ui Efb Lh4@*|) Effb
OL4Lt!i_@t|U|) EfDf 6?U 6Lh4 EffS
Ai it|4@|L? hit*|t t?} oeeo @hi

{%| ' ne2b{s +| fS.{oeeo| fe..%c| 
3
c
Ere Efe2 EfS Eff.
ihi .% ' %  22 e  s + n 2b  oeeo n ?|eoSeR|

-2 ' fD.( 7.- ' 2 .I ** O)TL|itt ET@*i
5@4T*iG b..2bbee 5ih@*W?_iTi?_i?Ui Efe. Lh4@*|) Ef.
OL4Lt!i_@t|U|) EfSb 6?U 6Lh4 Ef2b 
L| uLh4*@|L?t i T*@? @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu i TLh|t
@?_ |i i4ThU@* _t|hM|L?t Lu |ih hit_@*t t@|tu) |i @tt4T|L?t 4@?|@?i_
uLh it|4@|L?
Ai Thi_U|L?t uhL4 ML| 4L_i*t @hi L?it_i_ M| |i Thi_U|L? ihhLht Lu |i
4L_i* t?} oR% @hi t4@**ih |@? |Lti Lu |i 4L_i* t?} oeeo E€}hit . @?_ H

Fitted dgx

.05

0

-.05

-.1

1980 1985 1990 1995

.05 Fitted dgx
Forecast

0

-.05

1994 1995 1996 1997

6}hi .G hi_U|i UUh@U),, TLh|t | oR%Bih4@?)


Fitted dgx

.05

0

-.05

-.1

1980 1985 1990 1995

Fitted dgx
Forecast

0

-.05

-.1

1994 1995 1996 1997

6}hi HG hi_U|i UUh@U),, TLh|t | oeeoBih4@?)

6?@**)c ML| t)t|i4t _tT*@) i_i?Ui Lu T@h@4i|ih ?t|@M*|) ? |ih4t Lu |i 
L |it|t E€}hit b @?_ ef @?_ ? |ih4t Lu |i bDI UL?€_i?Ui M@?_t uLh |i
ULiUi?| it|4@|it E€}hit e @?_ e2 @h@4i|ih ?t|@M*|) t 4Lhi ThL?L?Ui_
uLh |i t)t|i4 t?} oeeo |@? uLh |i t)t|i4 t?} oR%

1.5 1up CHOWs 5%

1

.5

1991 1992 1993 1994 1995
1
Ndn CHOWs 5%

.5

1991 1992 1993 1994 1995
Nup CHOWs 5%
1

.8

1991 1992 1993 1994 1995

6}hi bG L Ait|t,, TLh|t | oR%Bih4@?)

D2
2 1up CHOWs 5%

1

1991 1992 1993 1994 1995
1 Ndn CHOWs 5%

.5

1991 1992 1993 1994 1995
2 Nup CHOWs 5%

1.5

1
1991 1992 1993 1994 1995

6}hi efG L Ait|t,, TLh|t | oeeoBih4@?)

Constant dgfy
-.02
1
-.03

-.04 .5

-.05
0
-.06
-.5
1991 1992 1993 1994 1995 1991 1992 1993 1994 1995
-.2
dgrpx gxECM_1

0 -.3

-.4
-.1
-.5
-.2
-.6

1991 1992 1993 1994 1995 1991 1992 1993 1994 1995

6}hi eG bDI L?€_i?Ui @?_t uLh , LiUi?|t, TLh|t | oR%Bih4@?)

D
2.5
Constant dgfy
.02
2
.015
1.5
.01
1
.005
.5
0

1991 1992 1993 1994 1995 1991 1992 1993 1994 1995

.25 dgreerw_3 gxECMI_1
-.3

0 -.4

-.5
-.25

-.6
-.5
1991 1992 1993 1994 1995 1991 1992 1993 1994 1995

6}hi e2G bDI L?€_i?Ui @?_t uLh , LiUi?|t, TLh|t | oeeoBih4@?)

Bih4@? W4TLh|t

wL?}h? 6LhUit i@th?} ThUit @t |i 4TLh| ThUi hi*@|i |L B# _i@|Lh
)i*_t it|4@|i_ i*@t|U|it uLh Bih4@? 4TLh|t |@| @hi ?L| hLMt| |L |i ULUi Lu
*@} W?_ii_c t)t|i4t t?} 4Lhi |@? |L *@}t i|ih *@U! UL?|i}h@|L? Lh @i
ULiUi?| it|4@|it | |i hL?} t}? Ai L?*) U@ti i M|?} UL?|i}h@|L?
@?_ UL?tt|i?U) | iUL?L4U |iLh) @t *@}t Lu |L ^@h|iht( |i it|4@|i_ ThUi
i*@t|U|) t ffS @?_ |i ?UL4i i*@t|U|) t D Ai t)t|i4 i M|tc Liihc
tih@* ULhhi*@|L? i@th?} ThUit | |i W6<t oeeo hii@*t |hii U@tit |
UL?|i}h@|L? M| |i it|4@|i_ ThUi i*@t|U|it @i |i hL?} t}? E|i) tL*_
Mi TLt|i At |iti uLh4*@|L?t @hi ?L| @ t@|tu@U|Lh) U@h@U|ih3@|L? Lu |i
Mi@Lh Lu Bih4@? 4TLh|t
W4TLh| L?|i}h@|L? +it*|t | oR6Bih4@?)
4Mih Lu *@}t W?U*_i_
b H . S D e 2|
L?|i}h@|L? ViU|Lht 2 f  f f f  
hUi,*@t|U|) ? ? f2D ? ? ? f  ffS
W?UL4i ,*@t|U|) ? ? SD ? ? ? S e.
wL@_?} LiUi?| ? ? ff ? ? ? ff. fD
5)t|i4<t +2 fbH fbH fbH fbH fbH fbH fbH fbH
W4TLh|<t 5ih@* Lhh f  ff8 fH ffD f  ff28 ff 8 ffD
5)t|i4<t 5ih@* Lhh f.e f  f2b f2. f  fH f. fff8

De
W4TLh| L?|i}h@|L? +it*|t | oeeoBih4@?)
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht f f f f   f 
hUi,*@t|U|) ? ? ? ? 2Sf 2 ? fSS
W?UL4i ,*@t|U|) ? ? ? ? fH 2.H ? H2
wL@_?} LiUi?| ? ? ? ? ffb f2 ? fe
2
5)t|i4<t + fb fb2 fb2 fb fb fb fbf fbf
W4TLh|<t 5ih@* Lhh f.H f e fe. f2e f.H ffH f
5)t|i4<t 5ih@* Lhh fbH fDe f b f.  fH2 fD f2b

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai UL?|i}h@|L? hit*|t t?} oR6 @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
f2D Eff2   6
^5 ' C ff b Eff D  eSH ffSe C + D c bSH bbee
kq 

E?@ Ef2D Ef22H
ff  Eff2 oR6

Ai it|4@|i_ tTii_ Lu @_t|4i?| t f @?_ }*) t}?€U@?| @t t |i ?UL4i
i*@t|U|)( |i ThUi i*@t|U|) t ?L| t}?€U@?| Liih Ai L|Lut@4T*i Thi_U|L?t
uhL4 |i UL?|i}h@|L? t)t|i4 i M| @ hi@tL?@M*i _i}hii Lu @UUh@U) E€}hi e  
L |it|t hiiU|c Liihc |i )TL|itt Lu T@h@4i|ih UL?t|@?U) E€}hi ee

1-step gm
Forecast
5.4

5.35

5.3

5.25

5.2

1994 1995 1996 1997

6}hi e G hi_U|i UUh@U)L?|i}h@|L?W4TLh|tBih4@?)

DD
1up gm 5% 1up CHOWs 5%

5

5

2.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Nup gm 5% Nup CHOWs 5%
2 2

1.5

1 1

.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn gm 5% Ndn CHOWs 5%

2 1.5

1

1
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi eeG L Ait|tL?|i}h@|L?  W4TLh|tBih4@?)

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} @ _44) @h@M*i |@| |@!it @ @*i Lu
L?i ? bb  Ai it|4@|L? hit*|t @hi

{6| ' nfbH.{+| fSbH{oR6| ff22.6c| 
3

Ere Ef2D EffH Eff2 
ihi .6 ' 6  eS.D  + n ffS D  oR6

-2 ' feb( 7.- ' 2 2I ** O)TL|itt ET@*i
5@4T*iG bSH bbee 5ih@*W?_iTi?_i?Ui Efe2 Lh4@*|) EfbS
OL4Lt!i_@t|U|) EfH  6?U 6Lh4 Eff28
Ai 4L_i* i T*@?t @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t @?_
|i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_ uLh
it|4@|L? i UiT| u?U|L?@* uLh4 Ai Thi_U|L? ihhLht @hi ?L| L?it_i_ E€}hi eDc
@?_ ML| |i L |it|t E€}hi eS @?_ |i bDI UL?€_i?Ui M@?_t Lu |i ULiUi?|t
E€}hi e. tTTLh| |i )TL|itt Lu T@h@4i|ih UL?t|@?U)

DS
Fitted dgm
.1

05

0

05

-.1

1970 1975 1980 1985 1990 1995
Fitted dgm
Forecast

05

0

05

1994 1995 1996 1997

6}hi eDG hi_U|i UUh@U)  ,  W4TLh|tBih4@?)

1up CHOWs 5%
1

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi eSG L Ait|t  ,  W4TLh|tBih4@?)

D.
Constant
0 dgm_1
0
-.2

01
-.4

0 1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dgrpm dgy
1

-.2
.5

-.4
1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dgy_1 dgy_2

.5 .5

0
0

1 1990 1991 1992 1993 1994 1995 0 1990 1991 1992 1993 1994 1995
dgy_3 gmECML_1

-.05
.5 -.1

-.15
0
1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi e.G bDI L?€_i?Ui @?_t uLh  , LiUi?|t  W4TLh|tBih4@?)

O W|@*@? Ah@_i
Ai iL*|L? Lu W|@*)<t uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _tT*@)i_ 
? €}hi eH L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} | uLhi}? @?_
_L4it|U ?UL4i +i*@|i ThUit uLh 4TLh|t tL @ _L?@h_ |hi?_ |L @ }hi@|ih
i |i?| |@? i TLh|t< hi*@|i ThUit W? @__|L?c |i W6<t oeeo tLt @ML| |i t@4i 
L*@|*|) @t hi*@|i ThUit M@ti_ L? _i@|Lht uhL4 |i @|L?@* W?UL4i UUL?|t

DH
11.5 Export Volume Import Volume

11 11

10.5 10.5
10

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Foreign GDP Domestic GDP
12.75
8.4
12.5
8.2
12.25

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Export Prices Import Prices
.5 .5
Price Ratio

IMF’s Reer
0 0

Price Ratio IMF’s Reer

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi eHG Ah@_ic W?UL4ic @?_ hUit  W|@*)

W|@*@? , TLh|t

wL?}h? 6LhUit i@th?} ThUit @t |i i TLh| ThUi hi*@|i |L uLhi}? B#
_i@|Lh )i*_t it|4@|i_ i*@t|U|it uLh W|@*@? i TLh|t |@| @hi ?L| hLMt| |L |i
ULUi Lu *@} 5)t|i4t | *@} *i?}|t }hi@|ih |@? |L _L ?L| i M| UL?|i}h@|L?
6Lh |i U@ti i M|?} UL?|i}h@|L?c |i it|4@|i_ ThUi i*@t|U|) t fHH @?_ |i 
?UL4i i*@t|U|) t S i@th?} ThUit | |i W6<t hi@* igiU|i i U@?}i
h@|i )i*_t L?i U@ti | UL?|i}h@|L? | @ ThUi i*@t|U|) Lu fe @?_ @? ?UL4i
i*@t|U|) Lu S

, TLh| L?|i}h@|L? +it*|t | oR%W|@*)
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht f f f f f f f 
hUi,*@t|U|) ? ? ? ? ? ? ? fHH|
W?UL4i ,*@t|U|) ? ? ? ? ? ? ? S2
wL@_?} LiUi?| ? ? ? ? ? ? ? ff
5)t|i4<t +2 fb fb2 fb2 fb fb fb fbf fbf
, TLh|<t 5ih@* Lhh ffb ffe8 f. fb f.S f. fD fSS
5)t|i4<t 5ih@* Lhh f f fe f f f e fD fH fHH fb.

Db
, TLh| L?|i}h@|L? +it*|t | oeeoW|@*)
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht f f f f f f f 
hUi,*@t|U|) ? ? ? ? ? ? ? fD|
W?UL4i ,*@t|U|) ? ? ? ? ? ? ? SD
wL@_?} LiUi?| ? ? ? ? ? ? ? ffe
2
5)t|i4<t + fH fH2 fH fHf f.b f.b f.b f..
, TLh|<t 5ih@* Lhh f D f22 fe. fD. f.f fH fHb f.e
5)t|i4<t 5ih@* Lhh ff. fe fDH f.e fb fbe fbS fbb

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai _i|@*i_ UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit

3 4 3 4
fff Eff   %
^5 ' C ff Efff  D  Sb fH.. C s+ D c b.S bbee
kq 

E?@ Efeb EfD.
ff Eff2 oR% 

ihi@t |i UL?|i}h@|L? hit*|t t?} |i W6<t hi@* igiU|i i U@?}i h@|i @hi

3 4 3 4
ff S Effe   %
^5 ' C ff  Eff D  SeH fDfD C s + D c b.S bbee
kq 

E?@ EfeD Ef H
ffDD Eff  oeeo

Ai hit*|t ?_U@|i |@| hi*@?Ui L? oR% }it UL4T@h@M*i i*@t|U|) it|4@|it |L
|Lti LM|@?i_ | oeeo ML| ? |ih4t Lu 4@}?|_it @?_ t|@|t|U@* t}?€U@?Ui
Ai hit*|t @*tL ?_U@|ic Liihc |@| |i *L@_?} ULiUi?|t @hi ?L| t|@|t|U@**)
t}?€U@?| U ?_ih4?it |i i_i?Ui L? UL?|i}h@|L? uLh ML| ThUi 4i@thit
, TLt| Thi_U|L?t uLh i TLh|t t}}it| UL4T@h@M*i Thi_U|i TihuLh4@?Ui uLh
t)t|i4t M@ti_ L? i|ih oR% Lh oeeo E€}hit eb @?_ Df 6}hit D @?_ D2 hiTLh| |i 
L |it|t uLh i@U 4i@thi Lu hi*@|i ThUit @?_ |i hit*|t ?_U@|i tL4i T@h@4i|ih 
?t|@M*|) i? hi*)?} L? oR% @?_ }hi@|ih i_i?Ui Lu T@h@4i|ih UL?t|@?U) i? 
t?} oeeo

Sf
1-step ix
Forecast

1.4

35

1.3

25

1.2

1994 1995 1996 1997

6}hi ebG  hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oR%W|@*)

45 1-step ix
Forecast

1.4

35

1.3

25

1994 1995 1996

6}hi DfG  hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oeeoW|@*)


1
1up ix 5% 3 1up CHOWs 5%

2
.5

1

1 1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Nup ix 5% Nup CHOWs 5%

1

.5

.5

1 1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn ix 5% Ndn CHOWs 5%
1

.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi DG L Ait|tL?|i}h@|L?, TLh|t | oR%W|@*)

1
1up ix 5% 1up CHOWs 5%
2

.5
1

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup ix 5% Nup CHOWs 5%

.5
.5

1 1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
Ndn ix 5% Ndn CHOWs 5%
1

.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi D2G L Ait|tL?|i}h@|L?, TLh|t | oeeoW|@*)

S2
5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4
i|iht Lu |L ihhLhULhhiU|L? 4L_i*tc L?i uLh i@U 4i@thi Lu hi*@|i ThUit Ai
it|4@|L? hit*|t t?} oR% @hi

{%| ' n2 2{s +| f 2D{oR%| ff2b.%c| 
3
c
Ere EfSf Ef  Effe
ihi .% ' %  Sb  s + n fH..  oR% n ?|eoSeR|

-2 ' f ( 7.- '  eI ** O)TL|itt ET@*i
5@4T*iG b.S bbee 5ih@*W?_iTi?_i?Ui EfeH Lh4@*|) Ef2 
OL4Lt!i_@t|U|) Efb 6?U 6Lh4 Ef.S
Ai it|4@|L? hit*|t t?} oeeo @hi

{%| ' nfbbe{s +| f22e{oeeo| ff.H.%c| 
3
c
Ere Ef2b EffH Eff2
ihi .% ' %  SeH  s + n fDfD  oeeo n ?|eoSeR|

-2 ' f ( 7.- ' 2HI ** O)TL|itt ET@*i
5@4T*iG b.S bbee 5ih@*W?_iTi?_i?Ui EfDH Lh4@*|) EfH
OL4Lt!i_@t|U|) Ef f 6?U 6Lh4 Efeb 
L| uLh4*@|L?t i T*@? L?i |h_ Lu |i @h@M*|) Lu |i }hL| h@|i Lu i TLh|t 
| |i i4ThU@* _t|hM|L?t Lu |i hit_@*t t@|tu)?} |i @tt4T|L?t 4@?
|@?i_ uLh it|4@|L? L|Uic Liihc |@| |i ihhLhULhhiU|L? ULiUi?| uLh |i
uLh4*@|L? t?} oR% t ?L| t}?€U@?|*) _gihi?| uhL4 3ihL M| | t uLh oeeo
Ai Thi_U|L?t Lu |i ihhLht Lu |i uLh4*@|L? t?} oR% @hi UL4T@h@M*i |L
|Lti Lu |i t)t|i4 hi*)?} L? oeeo E€}hit D @?_ De 54*@h*)c tTTLh| uLh |i 
)TL|itt Lu T@h@4i|ih UL?t|@?U) t t|hL?} @?_ hLMt| |L |i ULUi Lu 4i@thi Lu
hi*@|i ThUit

S
15
Fitted dix

.1

05

0

05

1980 1985 1990 1995
Fitted dix
Forecast
05

0

05

-.1
1994 1995 1996 1997

6}hi D G hi_U|i UUh@U), , TLh|t | oR%W|@*)

15
Fitted dix

.1

05

0

05

1980 1985 1990 1995
Fitted dix
Forecast
05

0

05

-.1

1994 1995 1996

6}hi DeG hi_U|i UUh@U), , TLh|t | oeeoW|@*)

Se
1.5
1up CHOWs 5%

1

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1990 1991 1992 1993 1994 1995
Nup CHOWs 5%
1

.5

1990 1991 1992 1993 1994 1995

6}hi DDG L Ait|t,, TLh|t | oR%W|@*)

1
1up CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi DSG L Ait|t,, TLh|t | oeeoW|@*)

SD
Constant dix_1 dify

-.25 2
0

1
05 -.5

0

1990 1995 1990 1995 1990 1995
dify_1 dirpx dirpx_1
4
0

3 0

2
-.5

1 -.5
1990 1995 1990 1995 1990 1995
dirpx_2 dirpx_3 .1 ixECM_1
.5
0
0

-.25
0 -.1

-.5
1990 1995 1990 1995 1990 1995

6}hi D.G bDI @?_t uLh LiUi?|t Lu ,, TLh|t | oR%W|@*)

Constant
0 dix_1
0

-.2
-.5
-.4

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dify_1 direerw_1
4
0
3

2
-.5
1

25 1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
direerw_2 direerw_3
0
0
-.25

25 -.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
0 ixECMI_1

-.2

1990 1991 1992 1993 1994 1995
6}hi DHG bDI @?_t uLh LiUi?|t Lu ,, TLh|t | oeeoW|@*)

SS
W|@*@? W4TLh|t

wL?}h? 6LhUit i@th?} ThUit | oR6 )i*_t ?^i UL?|i}h@|L? iU
|Lht uLh tTiU€U@|L?t | *@} *i?}|t uiih |@? t ^@h|iht 6Lh |iti U@titc |i
ThUi i*@t|U|) h@?}it uhL4 fef |L fS @?_ |i ?UL4i i*@t|U|) h@?}it fH |L e
i@th?} ThUit | oeeo hii@*t ?L UL?|i}h@|L?

W4TLh| L?|i}h@|L?+it*|t | oR6W|@*)
4Mih Lu *@}t W?U*_i_
b H . S D e| 2
L?|i}h@|L? ViU|Lht 2 2 2 2    
hUi,*@t|U|) ? ? ? ? fS fef f b f b
W?UL4i ,*@t|U|) ? ? ? ? f.H ef e2 e2
wL@_?} LiUi?| ? ? ? ? ffS fDf fD feH
5)t|i4<t +2 fH. fH. fHD fHD fHe fH fH fH2
W4TLh|<t 5ih@* Lhh feS fDe fH f.. f. fH2 fHH f.
5)t|i4<t 5ih@* Lhh fS ff. f22 feH f. f ff28 ff28

W4TLh| L?|i}h@|L? +it*|t | oeeoW|@*)
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht f f f f f f f f
hUi,*@t|U|) ? ? ? ? ? ? ? ?
W?UL4i ,*@t|U|) ? ? ? ? ? ? ? ?
wL@_?} LiUi?| ? ? ? ? ? ? ? ?
5)t|i4<t +2 fHH fHH fHS fHS fHe fH fH fH2
W4TLh|<t 5ih@* Lhh f2f fe2 ff. f2e fSe fSb f.D fH
5)t|i4<t 5ih@* Lhh fef fS. f S fSD ff fe fe. f .

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_
iU@ti |i t)t|i4 | €i *@}t @t @? t|@|t|U@**) ?t}?€U@?| *L@_?} ULi
Ui?|c i ti oR6 | uLh *@}t Et|@?_@h_ ihhLht ? T@hi?|itit

3 4 3 4
feb. Ef2   6
^5 ' C ff 2b Eff  D   b. fefe C + D c b.22bbee
kq 

E?@ EffDe Effef
ffHH Eff oR6

AL} |i i TLt| Thi_U|L?t @hi L?it_i_ E€}hi Dbc |i L |it|t U@??L|
hiiU| |i )TL|itt Lu T@h@4i|ih UL?t|@?U) E€}hi Sf

S.
1-step im
Forecast
25

1.2

75

15

25

1.1

75

1994 1995 1996 1997

6}hi DbG hi_U|i UUh@U)L?|i}h@|L?W4TLh|tW|@*)

1
1up im 5% 1up CHOWs 5%
1

.5
.5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup im 5% Nup CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn im 5% Ndn CHOWs 5%

75

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi SfG L Ait|tL?|i}h@|L?W4TLh|tW|@*)

SH
5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i*( |i it|4@|L? hit*|t @hi

{6| ' nf2{+| f S S.6c| 3 
Ere Ef . EffS
ihi .6 ' 6   bSH  + n fefe  oR6

-2 ' fe2( 7.- ' f2I ** O)TL|itt ET@*i
5@4T*iG b.f bbee 5ih@*W?_iTi?_i?Ui EffH Lh4@*|) Ef e
OL4Lt!i_@t|U|) EfDS 6?U 6Lh4 Effe8
Ai 4L_i* i T*@?t *itt |@? @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t @?_
|i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_ uLh
it|4@|L? i UiT| |i u?U|L?@* uLh4 Ai Thi_U|L? ihhLht |i?_ |L Mi L?it_i_
E€}hi S 6?@**)c |i L |it|t E€}hi S2 @?_ |i bDI UL?€_i?Ui M@?_t uLh
|i ULiUi?| it|4@|it E€}hi S  t}}it| |@| L?i U@??L| hiiU| |i )TL|itt Lu
T@h@4i|ih UL?t|@?U)

Fitted dim

05

0

05

-.1

1970 1975 1980 1985 1990 1995
05 Fitted dim
Forecast

0

05

-.1
1994 1995 1996 1997

6}hi SG hi_U|i UUh@U), W4TLh|tW|@*)

Sb
1
1up CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

75

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi S2G L Ait|t  , W4TLh|tW|@*)

Constant

-2

-3

2 1990 1991 1992 1993 1994 1995
diy_1

1.5

1

.5

0

1990 1991 1992 1993 1994 1995
imECM_1

-.3

-.4

-.5
1990 1991 1992 1993 1994 1995

6}hi S G bDILiUi?| @?_t uLh , LiUi?|tW4TLh|tW|@*)

.f
W a@T@?iti Ah@_i
Ai iL*|L? Lu a@T@?<t uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _tT*@)i_ 
? €}hi Se L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} | uLhi}? @?_
_L4it|U ?UL4i +i*@|i ThUit uLh 4TLh|t tL @ _L?@h_ |hi?_ |L @ }hi@|ih
i |i?| |@? i TLh|t< hi*@|i ThUi _L?@h_ |hi?_ W? @__|L?c |i W6<t hi@*
igiU|i i U@?}i h@|i tLt @? T@h_ |hi?_ U UL?|h@t|t | |i _L?@h_
|hi?_ ? |i hi*@|i ThUi Lu 4TLh|t

Export Volume 11 Import Volume
11
10.5
10.5

10 10

9.5 9.5

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

Foreign GDP Domestic GDP
13
7.5

12.5

7
1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Export Prices Import Prices
.5 Price Ratio
Price Ratio .5

IMF’s Reer
0 0
IMF’s Reer

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi SeG Ah@_ic W?UL4ic @?_ hUita@T@?

a@T@?iti , TLh|t

wL?}h? 6LhUit 6Lh @ }i? ThUi 4i@thic |i ULUi Lu *@} 4@||iht uLh |i
it|4@|i_ i*@t|U|it( |i ti?t||) t }hi@|ih uLh |i ThUi i*@t|U|) |@? uLh |i 
?UL4i i*@t|U|) 6Lh @ }i? *@}c |i ULUi Lu ThUi 4i@thi @*tL ?L|Ui@M*) @giU|t
|i it|4@|i_ i*@t|U|it

, TLh| L?|i}h@|L? +it*|t | oR%a@T@?
4Mih Lu *@}t W?U*_i_
b H . S D| e 2
L?|i}h@|L? ViU|Lht  f f f    f
hUi,*@t|U|)   ? ? ? f D  2 ?
W?UL4i ,*@t|U|) 2 ? ? ? 2 fSS fbe ?
wL@_?} LiUi?| ffe ? ? ? f fff ff2 ?
5)t|i4<t +2 fb. fb. fb. fbS fbS fbS fbS fbD
, TLh|<t 5ih@* Lhh fff8 fff8 ff28 fH fS f2 f2D ffe8
5)t|i4<t 5ih@* Lhh ff8 fff8 fff8 f2. fD f.f f. fe


, TLh| L?|i}h@|L? +it*|t | oeeoa@T@?
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht  f f f f f  
hUi,*@t|U|) fSH ? ? ? ? ? fSH Hf
W?UL4i ,*@t|U|) .D ? ? ? ? ? De 2H
wL@_?} LiUi?| ff ? ? ? ? ? ff2 ff
5)t|i4<t + 2 fb fb2 fb fb fb fbf fbf fHb
W4TLh|<t 5ih@* Lhh f2f ff. f.S f fH f  fHb fS
5)t|i4<t 5ih@* Lhh ff. ff 8 ff28 f f2 fH fbS fSf

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

+i*@?Ui L? oeeo )i*_t tiih@* U@?__@|i uLh4*@|L?tc M| |i it|4@|i_ *L@_?}
ULiUi?|t ? 4Lt| Lu |i4 @hi i|ih t4@** ? 4@}?|_i Lh t|@|t|U@**) ?t}?€U@?|
Ai _i|@*i_ UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
f2b EffH   %
^5 ' C ff2S Eff2 D   2 ffe C s+ D c b..2bbee
kq 

E?@ EffDH Ef2
f2e Eff oR%

Ai hit*|t ?_U@|i |@| hi*@?Ui L? |i UL?i?|L?@* 4i@thi Lu hi*@|i ThUit EoR%
}it t}?€U@?| it|4@|it uLh ?UL4i @?_ ThUitc U @hi @*tL ?L| t}?€U@?|*)
_gihi?| uhL4 L?i Ai ihhLhULhhiU|L? |ih4 t ?L|c Liihc t}?€U@?|
6}hi SD tLt |@| |i i TLt| Thi_U|L?t @hi hi@tL?@M*) @UUh@|i 6}hi
SS _tT*@)t |i L |it|t U t}}it| |@| L?i U@??L| hiiU| |i )TL|itt Lu
T@h@4i|ih UL?t|@?U)

.2
1-step jx
25 Forecast

11

75

95

25

0.9

75

85
1994 1995 1996 1997

6}hi SDG hi_U|i UUh@U)L?|i}h@|L?, TLh|ta@T@?

1 1
1up jx 5% 1up CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup jx 5% Nup CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn jx 5% Ndn CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi SSG L Ait|tL?|i}h@|L?, TLh|ta@T@?

.
5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* t?} oR% G

{%| ' nfDbf{s +| feD {oR%| fSb.%c| 
3
c
Ere Ef e Ef2 EffS
ihi .% ' %  2  s + n ff  oR% n ?|eoSeR|

-2 ' feb( 7.- ' 2feI ** O)TL|itt ET@*i
5@4T*iG b.. bbee 5ih@*W?_iTi?_i?Ui EffS Lh4@*|) Efb 
OL4Lt!i_@t|U|) Efbb 6?U 6Lh4 EfH.
Ai uLh4*@|L? i T*@?t @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu i TLh|t
@?_ |i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_
uLh it|4@|L? LhiLihc |i ihhLhULhhiU|L? ULiUi?| t t}?€U@?|*) _gihi?| uhL4
3ihL U t|hi?}|i?t |i i_i?Ui L? UL?|i}h@|L? @4L?} |Lti @h@M*it
Ai Thi_U|L?t Lu |i ihhLhULhhiU|L? 4L_i* |i?_ |L Mi L?it_i_ E€}hi S.
6?@**)c |i L |it|t E€}hi SH @?_ |i bDI UL?€_i?Ui M@?_t uLh |i , ULi
Ui?| it|4@|it E€}hi Sb t}}it| |@| L?i U@??L| hiiU| |i )TL|itt Lu T@h@4i|ih
UL?t|@?U)

Fitted djx

05

0

05

1980 1985 1990 1995
Fitted djx
Forecast

05

0

1994 1995 1996 1997

6}hi S.G hi_U|i UUh@U),, TLh|ta@T@?

.e
1
1up CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi SHG L Ait|t,, TLh|ta@T@?

djx_2 djfy_1
.5 1

.4

.5
.3

.2

0
.1

1990 1991 1992 1993 1994 1995 0 1990 1991 1992 1993 1994 1995
djrpx jxECM_1

-.2
-.05

-.3 -.1

-.4 -.15

-.2
-.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi SbG bDI L?€_i?Ui @?_t uLh , LiUi?|t, TLh|ta@T@?

a@T@?iti W4TLh|t

wL?}h? 6LhUit 6Lh @ }i? 4i@thi Lu ThUitc |i ?4Mih Lu UL?|i}h@|L? 
iU|Lht @?_ |i @||i?_?} i*@t|U|) it|4@|it @hi ti?t|i |L |i ?4Mih Lu *@}t ?
U*_i_ ? |i tTiU€U@|L? Nt?} oR6 }it 4*|T*i UL?|i}h@|L? iU|Lht i UiT| uLh
|i U@ti Lu t *@}t( ii? ? |t U@ti |i t)t|i4t<t hit_@*t *@U! tih@* ?_iTi?_i?Ui

.D
W4TLh| L?|i}h@|L? +it*|t | oR6a@T@?
4Mih Lu *@}t W?U*_i_
b H . S| D e 2
L?|i}h@|L? ViU|Lht 2 2 2  2 2 2 2
hUi,*@t|U|) ? ? ? f  ? ? ? ?
W?UL4i ,*@t|U|) ? ? ? fbS ? ? ? ?
wL@_?} LiUi?| ? ? ? f2 ? ? ? ?
2
5)t|i4<t + fbb fbb fbb fbH fbH fbH fbH fbH
W4TLh| 5ih@* Lhh fSf f S fS f22 ff fff8 fff8 ff8
5)t|i4<t 5ih@* Lhh f22 f2 f2. ff 8 f2S fff8 fff8 fff8

W4TLh| L?|i}h@|L? +it*|t | oeeoa@T@?
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht    f f f  2
hUi,*@t|U|) f SS S ? ? ? fbD ?
W?UL4i ,*@t|U|) efb b fb. ? ? ? e. ?
wL@_?} LiUi?| fff fff f ? ? ? ff ?
5)t|i4<t +2 fbS fbS fbS fbD fbD fbD fbD fbe
W4TLh|<t 5ih@* Lhh fS fDf f.H f.H fb2 fee fee f e
5)t|i4<t 5ih@* Lhh fb2 fbH fbH fH fHS fee fDS ff28

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_
Ai UL?|i}h@|L? hit*|t t?} oR6 @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
ff2D EffS   6
^5 ' C ff2 Eff D  fb. f 2S C
kq 
+ D c bDSebbee
E?@ Efb Ef2fb
ffeS Eff2 oR6

6}hi .f tLt |i i TLt| Thi_U|L?t U @hi hi@tL?@M*) @UUh@|i 6}hi
. _tT*@)t |i L |it|t U t}}it| |@| L?i U@??L| hiiU| |i )TL|itt Lu
T@h@4i|ih UL?t|@?U)

.S
1-step jm
11 Forecast

95

0.9

85

0.8

75

0.7

1994 1995 1996 1997

6}hi .fG hi_U|i UUh@U)L?|i}h@|L?W4TLh|ta@T@?

1 1
1up jm 5% 1up CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup jm 5% Nup CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn jm 5% Ndn CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hit .G L Ait|tL?|i}h@|L?W4TLh|ta@T@?

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} |L _44) @h@M*it |@| |@!i @ @*i Lu

..
L?i ? b.2 @?_ bHb Ai it|4@|L? hit*|t @hi

{6| ' nffe{+| ffeDS{oR6| ff 2S2.6c| 
3

Ere Ef . Effb Eff.
ihi .6 ' 6  fb.  + n f 2S2S  oR6 n ?|eoSeR|

-2 ' fD2( 7.- ' 2bI ** O)TL|itt ET@*i
5@4T*iG bDSebbee 5ih@*W?_iTi?_i?Ui Ef2H Lh4@*|) EfD.
OL4Lt!i_@t|U|) Ef2 6?U 6Lh4 Effb
Ai 4L_i* i T*@?t @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t @?_
|i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?|@?i_ uLh
it|4@|L? Ai Thi_U|L?t Lu |i 4L_i* @hic Liihc L?it_i_ E€}hi .2 6?@**)c
|i L |it|t E€}hi .  @?_ |i bDI UL?€_i?Ui M@?_t uLh |i , ULiUi?|
it|4@|it E€}hi .e t}}it| |@| L?i U@??L| hiiU| |i )TL|itt Lu T@h@4i|ih
UL?t|@?U)

.1 Fitted djm

05

0

05

1960 1965 1970 1975 1980 1985 1990 1995
Fitted djm
Forecast
05

0

05

1994 1995 1996 1997

6}hi .2G hi_U|i UUh@U),W4TLh|ta@T@?

.H
1
1up CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi . G L Ait|t,W4TLh|ta@T@?

Constant djm_1 djm_2
-.2 djm_4
0
.3 .3 -.3
01
.2 .2 -.4

02 .1 .1 -.5

0 1990 1995 1990 1995 1990 1995 1990 1995
djm_5 djrpm djrpm_1 djrpm_4
0 .3 0
-.1
-.1 .2
-.1
-.2
-.2 .1
-.3 -.2

1990 1995 1990 1995 1990 1995 1990 1995
djy_1 djy_2 djy_3 djy_4
0 1 1
.5
-.5 .5
.5
0

1990 1995 1990 1995 1990 1995 1990 1995
jmECM_1
0

05

1990 1995

6}hi .eG bDI L?€_i?Ui @?_t uLh , LiUi?|tW4TLh|ta@T@?

a Nk Ah@_i
Ai iL*|L? Lu Nk<t uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _tT*@)i_ ?
€}hi .D L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} | uLhi}? @?_
_L4it|U ?UL4i +i*@|i ThUit uLh ML| i TLh|t @?_ 4TLh|t tL @ _L?@h_
|hi?_ M| |i _iU*?i ? |i hi*@|i ThUi Lu 4TLh|t t 4Lhi ThL?L?Ui_ |@? |@|

.b
Lu i TLh|t< hi*@|i ThUi W? @__|L?c |i W6<t hi@* igiU|i i U@?}i h@|i tLt
t4@**ih L*@|*|) |@? |i UL?i?|L?@* 4i@thi Lu hi*@|i ThUit M@ti_ L? _i@|Lht
uhL4 |i @|L?@* W?UL4i UUL?|t

Export Volume Import Volume
10.5 10.5

10 10

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Foreign GDP Domestic GDP
8.4
11.75
8.2

11.5
8

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
.5 Export Prices .5 Import Prices
IMF’s Reer

Price Ratio
0 0
IMF’s Reer
Price Ratio
1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi .DG Ah@_ic W?UL4ic @?_ hUitN?|i_ k?}_L4

Nk , TLh|t

wL?}h? 6LhUit i@th?} ThUit @t |i i TLh| ThUi hi*@|i |L uLhi}? B#
_i@|Lh )i*_t it|4@|i_ i*@t|U|it uLh h|t i TLh|t |@| @hi ?L| hLMt| |L |i
ULUi Lu *@} AL} @** Lu |i t)t|i4t i M| UL?|i}h@|L?c L?*) |i L?it |
uiih |@? €i *@}t @i ?i}@|i ThUi i*@t|U|it( uLh |iti U@titc |i iU|Lh Lu
hit_@*t i M|t tih@* ULhhi*@|L? i@th?} ThUit | |i W6<t igiU|i hi@*
i U@?}i h@|i )i*_t UL4T@h@M*i hit*|t( uLh4*@|L?t |L| tih@* ULhhi*@|L? i  
M| hi*@|i*) *L ThUi i*@t|U|it

, TLh| L?|i}h@|L? +it*|t | oR%N?|i_ k?}_L4
4Mih Lu *@}t W?U*_i_
b H . S D e| 2
L?|i}h@|L? ViU|Lht        
hUi,*@t|U|) . fSf feb fHH fS DD  e f2
W?UL4i ,*@t|U|) fbS  H S S f H 22H
wL@_?} LiUi?| fH f f f2D ffe ff ffb ffH ffS
5)t|i4<t +2 fHS fHD fH2 f.b f.b f.H f.S f.S
, TLh|<t 5ih@* Lhh fHe fDD f2 ffD f2. fff8 fH f .
5)t|i4<t 5ih@* Lhh fbf f.e fDf fS f. fff8 fff8 fff8

Hf
, TLh| L?|i}h@|L? +it*|t | oeeoN?|i_ k?}_L4
4Mih Lu *@}t W?U*_i_
b H . S D e 2|
L?|i}h@|L? ViU|Lht   f   f f 
hUi,*@t|U|) fS fD ? ff. ffD ? ? 
W?UL4i ,*@t|U|) 2S 2S ? 2S 2D ? ? fb
wL@_?} LiUi?| ff ffS ? ffH ff ? ? ff
5)t|i4<t + 2 fH2 fH fHf f.H f.. f.e f.2 f.2
, TLh|<t 5ih@* Lhh fHe f.S fSD f b fS fSe fe2 fH
5)t|i4<t 5ih@* Lhh ff 8 f2D fHS fH ffS fff8 fff8 fff8

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai _i|@*i_ UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
ff2 EffS   %
^5 ' C ffH Efffe D  fD DDf C s+ D c b..bbee
kq 

E?@ Ef 2  EfDfD
fff Eff2. oR% 

ihi@t |i UL?|i}h@|L? hit*|t t?} oeeo @hi
3 4 3 4
ff2D Eff   %
^5 ' C ffS Efff  D  fHb fD C s+ D c b..bbee
kq 

E?@ Ef e Ef De
ff b Eff2f oeeo

Ai hit*|t ?_U@|i |@| hi*@?Ui L? |i UL?i?|L?@* 4i@thi Lu hi*@|i ThUit
EoR% }it UL4T@h@M*i i*@t|U|) it|4@|it |L |Lti LM|@?i_ M) |i W6<t 4i@thi
Lu |i hi@* i U@?}i h@|i Eoeeo ML| ? |ih4t Lu 4@}?|_it @?_ t|@|t|U@* t}?€
U@?Ui | |i t@4i |4ic |i ihhLhULhhiU|L? |ih4t uLh oeeo @t }hi@|ih t|@|t|U@*
t}?€U@?Ui |@? |@| uLh oR%
6}hit .S @?_ .. tL |i i TLt| Thi_U|L?t t?} |i |L 4i@thit Lu hi*@|i
ThUit @?_ @ UL4T@htL? Lu |iti _@|@ t}}it| |@| hi*@?Ui L? oeeo hit*|t ? }hi@|ih
ihhLht |@? hi*@?Ui L? oR%


1-step ex
Forecast

0.7

65

0.6

55

1994 1995 1996 1997

6}hi .SG hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oR%N?|i_ k?}_L4

0.7 1-step ex
Forecast

75

65

25

0.6

75

55

25

1994 1995 1996 1997

6}hi ..G hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oeeoN?|i_ k?}_L4

H2
6}hi .H @?_ .b hiTLh| |i L |it|t @ttLU@|i_ | i@U 4i@thi Lu hi*@|i
ThUit @?_ |i hit*|t ?_U@|i |@|c | @ ULT*i Lu i UiT|L?tc i U@??L| hiiU| |i 
)TL|itt Lu T@h@4i|ih UL?t|@?U) uLh i|ih 4i@thi Lu hi*@|i ThUit

1
1up ex 5% 1up CHOWs 5%
2

.5
1

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup ex 5% Nup CHOWs 5%

.75

.5
.5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn ex 5% Ndn CHOWs 5%

75

.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi .HG L Ait|tL?|i}h@|L?, TLh|t | oR%N?|i_ k?}_L4

1up ex 5% 1up CHOWs 5%
1
1

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup ex 5% Nup CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn ex 5% Ndn CHOWs 5%

1
.75

75

.5
.5
1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi .bG L Ait|tL?|i}h@|L?, TLh|t | oeeoN?|i_ k?}_L4

H
5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu |L ihhLhULhhiU|L? 4L_i*tc L?i uLh i@U 4i@thi Lu hi*@|i ThUit( i ?U*_i
|L _44) @h@M*it uLh b.b @?_ b.b2 Ai it|4@|L? hit*|t t?} oR% @hi

{%| ' nfb2{s +| f2e2{oR%| ff2D.%c| 
3
c
Ere EfSD Eff EffD
ihi .% ' %  fD  s + n DDf  oR% n ?|eoSeR|

-2 ' f.e( 7.- ' .HI ** O)TL|itt ET@*i
5@4T*iG b.. bbee 5ih@*W?_iTi?_i?Ui EffS Lh4@*|) Efe
OL4Lt!i_@t|U|) EfSb 6?U 6Lh4 EfH.
Ai it|4@|L? hit*|t t?} oeeo @hi

{%| ' nfHff{s +| f2Hb{oeeo| ffD.%c| 
3
c
Ere EfSf Effb Eff2
ihi .% ' %  fHb  s + n fD  oeeo n ?|eoSeR|

-2 ' f.2( 7.- ' HDI ** O)TL|itt ET@*i
5@4T*iG b.. bbee 5ih@*W?_iTi?_i?Ui EffH Lh4@*|) Ef2
OL4Lt!i_@t|U|) EfbD 6?U 6Lh4 EfDb 
L| uLh4*@|L?t i T*@? ?i@h*) |hii ^@h|iht Lu |i @h@M*|) Lu |i }hL| h@|i
Lu i TLh|t @?_ |i i4ThU@* _t|hM|L?t Lu |i hit_@*t t@|tu) |i @tt4T|L?t
4@?|@?i_ uLh it|4@|L? L|Uic Liihc |@| |i ihhLhULhhiU|L? ULiUi?|t @hi
?L| t}?€U@?|*) _gihi?| uhL4 3ihL At hit*| i@!i?t |i i_i?Ui L? UL?|i}h@|L?
@4L?} |Lti @h@M*it
Ai Thi_U|L? ihhLht |i?_ |L Mi L?it_i_ E€}hit Hf @?_ H | |i ihhLht Lu
uLh4*@|L? t?} oR% Mi?} Lhti |@? |Lti Lu oeeo

He
Fitted dex

.1

0

1980 1985 1990 1995
Fitted dex
Forecast
025

0

025

1994 1995 1996 1997

6}hi HfG hi_U|i UUh@U),, TLh|t | oR%N?|i_ k?}_L4

Fitted dex

.1

0

1980 1985 1990 1995
05 Fitted dex
Forecast

25

0

25

1994 1995 1996

6}hi HG hi_U|i UUh@U),, TLh|t | oeeoN?|i_ k?}_L4

6}hit H2 @?_ H hiTLh| |i hit*|t uhL4 |i L |it|t U U@??L| hiiU| |i 
)TL|itt Lu T@h@4i|ih UL?t|@?U) At i_i?Ui t ULhhLMLh@|i_ M) |i iL*|L?
Lu |i bDI UL?€_i?Ui M@?_t uLh |i hiUhti it|4@|it E€}hit He @?_ HD

HD
1up CHOWs 5%
1

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi H2G L Ait|t,, TLh|t | oR%N?|i_ k?}_L4

1up CHOWs 5%

1

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi H G L Ait|t,, TLh|t | oeeoN?|i_ k?}_L4

HS
Constant dex_1
1.5 defy
1.5 defy_1
0
-.2 1 1
01
.5 .5
02 -.4 0 0

1990 1995 1.5 1990 1995 1 1990 1995 1990 1995
defy_2 defy_3 defy_4 defy_5
1 .5
1 .5
.5 0

0 .5 0 -.5

-.5 0 -.5 -1
1990 1995 1990 1995 .2 1990 1995 1990 1995
derpx derpx_1 derpx_2 derpx_3
0 .1 .1
.1
-.1 0 0
0
-.2 -.1 -.1
-.1
-.3 -.2 -.2
1990 1995 1990 1995 1990 1995 1990 1995
derpx_4 exECM_1
.1
0
0

-.1
-.05
-.2
1990 1995 1990 1995
6}hi HeG bDI @?_t uLh , LiUi?|t, TLh|t | oR%N?|i_ k?}_L4

H.
Constant dex_1 defy defy_1
02 1 1.5
-.2
.5 1
0
0 .5
-.4
02 -.5 0
1990 1995 1.5 1990 1995 1 1990 1995 .5 1990 1995
defy_2 defy_3 defy_4 defy_5
1
1 .5 0
.5
.5 0 -.5
0 0
-.5 -1
-.5 -.5
1990 1995 1990 1995 1990 1995 1990 1995
dereerw dereerw_1 dereerw_2 dereerw_3
.1 0 .1
0
0 -.1 0

-.1 -.1 -.1
-.2
-.2 -.2 -.2

1990 1995 1990 1995 1990 1995 1990 1995
dereerw_4 dereerw_5 exECMI_1
0 .2 .05

.1 0
-.1
0 -.05
-.2

1990 1995 1990 1995 1990 1995
6}hi HDG bDI @?_t uLh , LiUi?|t, TLh|t | oeeoN?|i_ k?}_L4

Nk W4TLh|t

wL?}h? 6LhUit i@th?} ThUit @t |i 4TLh| ThUi hi*@|i |L |i B#
_i@|Lh )i*_t it|4@|it |@| @hi ?L| hLMt| |L |i ULUi Lu *@} ?*) |i tTiU€U@|L? 
| €i *@}t i M|t UL?|i}h@|L? | @? it|4@|i_ ThUi i*@t|U|) Lu fD @?_ @?
it|4@|i_ ?UL4i i*@t|U|) Lu 22 i@th?} ThUit | |i W6<t hi@* igiU|i
i U@?}i h@|i )i*_t Lhti hit*|tG |i L?*) uLh4*@|L? i M|?} UL?|i}h@|L? @t
*@}t Lu |L ^@h|ihtc @ ThUi i*@t|U|) Lu f2 @?_ @? ?UL4i i*@t|U|) Lu 2
W4TLh| L?|i}h@|L? +it*|t | oR6N?|i_ k?}_L4
4Mih Lu *@}t W?U*_i_
b H . S D| e 2
L?|i}h@|L? ViU|Lht f f f f  2 2 2
hUi,*@t|U|) ? ? ? ? fDH ? ? ?
W?UL4i ,*@t|U|) ? ? ? ? 22 ? ? ?
wL@_?} LiUi?| ? ? ? ? ff ? ? ?
2
5)t|i4<t + fb. fb. fb. fb. fb. fb. fb. fb.
W4TLh|<t 5ih@* Lhh f  fS f.2 f2f f fee fS. fbf
5)t|i4<t 5ih@* Lhh fe fS fe ffD f ffS feS f D

HH
W4TLh| L?|i}h@|L? +it*|t | oeeoN?|i_ k?}_L4
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht f f f f f f f 
hUi,*@t|U|) ? ? ? ? ? ? ? f.
W?UL4i ,*@t|U|) ? ? ? ? ? ? ? 2fe
wL@_?} LiUi?| ? ? ? ? ? ? ? f2
2
5)t|i4<t + fb. fbS fbS fbS fbS fbS fbS fbS
W4TLh|<t 5ih@* Lhh fDH fDb fS f2H fH fSS fe fD.
5)t|i4<t 5ih@* Lhh f2f fDD f2 fDf fSS fD ff ffH

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
fffD Efffe   6
^5 ' C fffS Efff2 D  22fb fDHf C + D c bDS2bbee
kq

E?@ EfH. ED
fffS Eff  oR6

Ai i_i?Ui ? u@Lh Lu UL?|i}h@|L? uLh Nk 4TLh|t t i@!c @t i_i?Ui_ M)
@ *L@_?} ULiUi?| |@| t ?L| t}?€U@?|*) _gihi?| uhL4 3ihL @?_ @ ThUi i*@t|U|)
|@|c @}@?c t ?L| t|@|t|U@**) t}?€U@?| Bi? |i i@! U@h@U|ih Lu |i i_i?Uic
|i hit*|t tL*_ Mi |hi@|i_ | }hi@|ih U@|L? |@? t@**) Ai L|Lut@4T*i
Thi_U|L? ihhLht |i?_ |L Mi L?it_i_ |L} ?L| t}?€U@?|*) _gihi?| uhL4 3ihL
E€}hi HS L |it|t U@??L| hiiU| |i )TL|itt Lu T@h@4i|ih UL?t|@?U) E€}hi
H.

Hb
75 1-step em
Forecast

75

25

0.7

75

65

25

0.6

1994 1995 1996 1997

6}hi HSG hi_U|i UUh@U)L?|i}h@|L?W4TLh|tN?|i_ k?}_L4
1 1
1up em 5% 1up CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup em 5% Nup CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn em 5% Ndn CHOWs 5%

.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi H.G L Ait|t  L?|i}h@|L?W4TLh|tN?|i_ k?}_L4

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} |hii _44) @h@M*it |@| |@!i @ @*i
Lu L?i ? b.2ec b.D2c b.be Ai it|4@|L? hit*|t @hi

bf
{6| ' nffH{+| ffb2.6c| 3
Ere Ef f Efff
ihi .6 ' 6  22fb  + n fDHf  oR6 n ?|eoSeR|

-2 ' f2 ( 7.- ' 2bI ** O)TL|itt ET@*i
5@4T*iG bDDebbee 5ih@*W?_iTi?_i?Ui EffD Lh4@*|) Efff8
OL4Lt!i_@t|U|) Eff28 6?U 6Lh4 Ef.H
Ai 4L_i* M@hi*) i T*@?t L?i ^@h|ih Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t
@?_ |i i4ThU@* _t|hM|L? Lu |i hit_@*t _Lit ?L| t@|tu) @** Lu |i @tt4T|L?t
4@?|@?i_ uLh it|4@|L?c M| |i Thi_U|L? ihhLht @hi ?L| L?it_i_ E€}hi HH
#itT|i |iti *4|@|L?tc |i L |it|t E€}hi Hb @?_ ULiUi?| it|4@|it E€}hi
bf tTTLh| |i )TL|itt Lu T@h@4i|ih UL?t|@?U)

Fitted dem
.1

05

0

05

1955 1960 1965 1970 1975 1980 1985 1990 1995
Fitted dem
Forecast

05

0

05

1994 1995 1996 1997

6}hi HHG hi_U|i UUh@U),W4TLh|tN?|i_ k}?_L4


1
1up CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi HbG L Ait|t,W4TLh|tN?|i_ k?}_L4
0
Constant dem_1

05 -.1

-.2
25

-.3
0

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dey dey_1

.5 .5

0 0
1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dey_2 emECM_1
0

.5 -.025

-.05

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi bfG bDI @?_t uLh , LiUi?|t  W4TLh|tN?|i_ k?}_L4

k N5 Ah@_i
Ai iL*|L? Lu N5 uLhi}? |h@_i @?_ |t ThL 4@|i _i|ih4?@?|t @hi _tT*@)i_ ?
€}hi b L| i TLh| @?_ 4TLh| L*4it }hL Lih |4i @*L?} | uLhi}? @?_
_L4it|U ?UL4i +i*@|i ThUit uLh ML| |h@_i Lt tL _L?@h_ |hi?_tc |L}

b2
|i _L?@h_ |hi?_ ? |i hi*@|i ThUi Lu 4TLh|t t UL?t_ih@M*) *itt @UUi?|@|i_
|@? |@| Lu i TLh| ThUit Ai W6<t oeeo tLt *itt L*@|*|) |@? |i UL?i?|L?@*
4i@thi Lu hi*@|i ThUit M@ti_ L? _i@|Lht uhL4 |i @|L?@* W?UL4i UUL?|t

Export Volume 7 Import Volume
6.5
6.5
6
6
5.5
5.5
1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

Foreign GDP Domestic GDP
7.75 8.75

8.5
7.5

8.25
7.25
1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995
Export Prices IMF’s Reer Import Prices
.5 .5 IMF’s Reer
Price Ratio Price Ratio

0 0

1970 1975 1980 1985 1990 1995 1970 1975 1980 1985 1990 1995

6}hi bG Ah@_ic W?UL4ic @?_ hUitN?|i_ 5|@|it

N5 , TLh|t

wL?}h? 6LhUit 6Lh @ }i? 4i@thi Lu ThUitc i*@t|U|it uLh N5 i TLh|t
@TTi@h hLMt| |L |i ULUi Lu *@}*i?}| 6Lh @ }i? *@}c Liihc |i it|4@|it @hi
?L| hLMt| |L |i ULUi Lu ThUi 4i@thi

, TLh| L?|i}h@|L? | +it*|t | oR%N?|i_ 5|@|it
4Mih Lu *@}t W?U*_i_
b H . S D e 2|
L?|i}h@|L? ViU|Lht 2 2    f f 
hUi,*@t|U|) ? ?  H ee D ? ? e.
W?UL4i ,*@t|U|) ? ? fHb f. f.e ? ? fH
wL@_?} LiUi?| ? ? fD ff ffD ? ? ffS
2
5)t|i4<t + fbS fbD fb fb2 fb2 fb2 fb2 fb
, TLh|<t 5ih@* Lhh fDf f2H ffb fe ffS fSe fb. fH
5)t|i4<t 5ih@* Lhh f2. ff8 fff8 fff8 ff8 ffD fHe f.

b
, TLh| L?|i}h@|L? +it*|t | oeeoN?|i_ 5|@|it
4Mih Lu *@}t W?U*_i_
b H . S D e 2|
L?|i}h@|L? ViU|Lht 2     2  
hUi,*@t|U|) ? f.2 fD2 fSS fS2 ? fD. fDS
W?UL4i ,*@t|U|) ? SH . H .D ? .b .b
wL@_?} LiUi?| ? f2D f D f2e f f ? f2f f22
5)t|i4<t + 2 fb. fb. fbS fbS fbD fbD fbD fbD
, TLh|<t 5ih@* Lhh ff28 ffe8 f. f2f f2f fSe fSS fSe
5)t|i4<t 5ih@* Lhh ff 8 fff8 ff. fff8 ff8 f S fHb fbS

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai _i|@*i_ UL?|i}h@|L? hit*|t t?} oR% @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
ffDS EffeH   %
^5 ' C ffe Efff D  fH2H eSb C s+ D c b.S bbee
kq 

E?@ Efb Ef2ee
ff . Eff2  oR% 

ihi@t |i UL?|i}h@|L? hit*|t t?} oeeo @hi

3 4 3 4
f2fe Effe   %
^5 ' C fffS Efff D  .HD fDS C s+ D c b.Sebbee
kq 

E?@ Eff.b EffHe
ff Eff.  oeeo

Ai hit*|t ?_U@|i |@| hi*@?Ui L? oR% }it h@|ih _gihi?| i*@t|U|) it|4@|it
|L |Lti LM|@?i_ | oeeo ML| ? |ih4t Lu 4@}?|_it @?_ t|@|t|U@* t}?€U@?Ui
5TiU€U@**)c hi*@?Ui L? oeeo _LM*it |i it|4@|i_ ?UL4i i*@t|U|) @?_ @*it |i
ThUi i*@t|U|) hi*@|i |L |i 4L_i* t?} oR% LhiLihc |i ihhLhULhhiU|L? |ih4
uLh oeeo t *@h}ih @?_ | @t }hi@|ih t|@|t|U@* t}?€U@?Ui |@? |i L?i uLh oR%
6}hit b2 @?_ b Mi*L UL4T@hi |i i TLt| Thi_U|L?t @ttLU@|i_ | |i |L
4i@thit Lu hi*@|i ThUit @?_ |i i_i?Ui ?_U@|it t4@**ih uLhiU@t| ihhLht t?}
oeeo

be
75
1-step uxgs
Forecast

6.7

65

6.6

55

1994 1995 1996 1997

6}hi b2G hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oR%N?|i_ 5|@|it

.75
1-step uxgs
Forecast

6.7

.65

6.6

.55

1994 1995 1996 1997

6}hi b G hi_U|i UUh@U)L?|i}h@|L?, TLh|t | oeeoN?|i_ 5|@|it

6}hit be @?_ bD hiTLh| |i L |it|t uLh i@U 4i@thi Lu hi*@|i ThUit @?_
|i i_i?Uic L?Ui @}@?c tTTLh|t |i )TL|itt Lu T@h@4i|ih UL?t|@?U) M| |i ti
Lu oeeo @t uiih u@*hit Lu |i L |it|

bD
1
1up uxgs 5% 1up CHOWs 5%

1

.5
.5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Nup uxgs 5% Nup CHOWs 5%

.5 .5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn uxgs 5% Ndn CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi beG L Ait|tL?|i}h@|L?, TLh|t | oR%N?|i_ 5|@|it

1 1
1up uxgs 5% 1up CHOWs 5%

.5 .5

1990
1 1991 1992 1993 1994 1995 1990
1 1991 1992 1993 1994 1995
Nup uxgs 5% Nup CHOWs 5%

.5 .5

1990
1 1991 1992 1993 1994 1995 1990
1 1991 1992 1993 1994 1995
Ndn uxgs 5% Ndn CHOWs 5%

75

.5
.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi bDG L Ait|tL?|i}h@|L?, TLh|t | oeeoN?|i_ 5|@|it

bS
5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu |L ihhLhULhhiU|L? 4L_i*tc L?i uLh i@U 4i@thi Lu hi*@|i ThUitc @?_ |
|L _44) @h@M*it |@!?} @ @*i Lu L?i ? b.H2 @?_ b..e Ai it|4@|L?
hit*|t t?} oR% @hi

{%| ' nH2S{s +| fD {oR%| ffDb.%c| 
3
c
Ere EfeH Ef2  EffD
ihi .% ' %  fH2.S  s + n eSb  oR% n ?|eoSeR|

-2 ' feb( 7.- ' .bI ** O)TL|itt ET@*i
5@4T*iG b.S bbee 5ih@*W?_iTi?_i?Ui EfH Lh4@*|) Efeb
OL4Lt!i_@t|U|) EfDf 6?U 6Lh4 EffS
Ai it|4@|L? hit*|t t?} oeeo @hi

{%| ' nfbf.{s +| fff{oeeo| fDf..%c| 
3
c
Ere Ef2b EffD Eff 
ihi .% ' %  .HD  s + n fDS  oeeo n ?|eoSeR|

-2 ' fSb( 7.- ' SDI ** O)TL|itt ET@*i
5@4T*iG b.S bbee 5ih@*W?_iTi?_i?Ui EfS2 Lh4@*|) Efbf
OL4Lt!i_@t|U|) Ef22 6?U 6Lh4 Ef2D
Ai uLh4*@|L? t?} oR% i T*@?t @ML| @*u Lu |i @h@M*|) Lu |i }hL| h@|i Lu
i TLh|t @?_ |i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t 4@?
|@?i_ uLh it|4@|L? At uLh4*@|L? @tc Liihc @? ihhLhULhhiU|L? ULiUi?|
|@| t ?L| t}?€U@?|*) _gihi?| uhL4 3ihL U i@!i?t |i i_i?Ui L? UL?|i}h@
|L? @4L?} |Lti @h@M*it Ai uLh4*@|L? t?} oeeo i T*@?t |L |h_t Lu |i 
@h@M*|) Lu }hL| h@|i @?_ |t hit_@*t @hi @*tL UL?tt|i?| | |i 4@?|@?i_
@tt4T|L?t
Ai Thi_U|L?t Lu ML| ihhLhULhhiU|L? 4L_i*t @hi L?it_i_ M| |i L|Lu
t@4T*i Thi_U|L?t Lu |i uLh4*@|L? t?} oR% @hi Lhti |@? |Lti Lu oeeo E€}hit
bS @?_ b.

b.
.1
Fitted duxgs

05

0

1980 1985 1990 1995
Fitted duxgs
05
Forecast

0

05

1994 1995 1996 1997

6}hi bSG hi_U|i UUh@U),, TLh|t | oR%N?|i_ 5|@|it
.1
Fitted duxgs

05

0

1980 1985 1990 1995
05 Fitted duxgs
Forecast

25

0

25

1994 1995 1996

6}hi b.G hi_U|i UUh@U),, TLh|t | oeeoN?|i_ 5|@|it
W? |ih4t Lu T@h@4i|ih UL?t|@?U)c ML| ihhLhULhhiU|L? 4L_i*t Lgih UL4T@h@M*i
hi*@M*|) @t hiiU|i_ ? |i L |it|t E€}hit bH @?_ bb @?_ |i bDI UL?€_i?Ui
M@?_t Lu |i hiUhti ULiUi?|t E€}hit ff @?_ f

bH
1up CHOWs 5%

1

.5

1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

1

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi bHG L Ait|t,, TLh|t | oR%N?|i_ 5|@|it

1up CHOWs 5%

1

.5

1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

1

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi bbG L Ait|t,, TLh|t | oeeoN?|i_ 5|@|it

bb
Constant 3 dufgdp_1

0
2.5

05
2
01

1.5
15

1
02

0 1990 1991 1992 1993 1994 1995 .1 1990 1991 1992 1993 1994 1995
drpx_1 uxECM_1

0
-.5

-.1

-1

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi ffG bDI @?_t uLh , LiUi?|t, TLh|t | oR%N?|i_ 5|@|it

uxECMI_1

-.1

15

-.2

.5 1990 1991 1992 1993 1994 1995
dufgdp_1

1

.5

1990 1991 1992 1993 1994 1995
dureerw

.1

0

-.1

1990 1991 1992 1993 1994 1995

6}hi fG bDI @?_t uLh , LiUi?|t, TLh|t | oeeoN?|i_ 5|@|it

ff
N5 W4TLh|t

wL?}h? 6LhUit W?UL4i i*@t|U|it uLh 4TLh|t @TTi@h hLMt| |L ML| |i
ULUi Lu *@}*i?}| @?_ ThUi 4i@thi 6Lh @ }i? 4i@thi Lu ThUitc ThUi i*@t|U|it
@hi @*tL hLMt| |L |i ULUi Lu *@}*i?}|( |i it|4@|it @hi ?L| hLMt| |L |i ULUi
Lu ThUi 4i@thi @?_ |@!i |i hL?} t}? uLh |i W6<t 4i@thi Lu hi@* i U@?}i
h@|it
W4TLh| L?|i}h@|L? +it*|t | oR6N?|i_ 5|@|it
4Mih Lu *@}t W?U*_i_
b| H . S D e 2
L?|i}h@|L? ViU|Lht       2 2
hUi,*@t|U|) f  f2 f . f S fe fe ? ?
W?UL4i ,*@t|U|) .b .2 2.S 22 2f 2f ? ?
wL@_?} LiUi?| ff ffH ff ff ff ff ? ?
5)t|i4<t +2 fbb fbb fbb fbb fbb fbb fbb fbb
W4TLh|<t 5ih@* Lhh f2 f . f ff 8 f  f . ffS fH
5)t|i4<t 5ih@* Lhh f2S f2 ff28 ff28 ff 8 ff28 fff8 fff8

W4TLh| L?|i}h@|L? +it*|t | oeeoN?|i_ 5|@|it
4Mih Lu *@}t W?U*_i_
b H . S D e 2
L?|i}h@|L? ViU|Lht 2 2    f f 
hUi,*@t|U|) ? ? f f f2 ? ? f
W?UL4i ,*@t|U|) ? ? 2 2 2e ? ? 222
wL@_?} LiUi?| ? ? ff ff2 ffS ? ? ffe
5)t|i4<t +2 fbH fbH fbH fbH fbH fbH fb. fb.
W4TLh|<t 5ih@* Lhh ff8 ffD fff8 ff 8 fSe f2H f2D ff 8
5)t|i4<t 5ih@* Lhh ff8 ffH fee ffH fDD f2f f2 f2H

?G ?_U@|it |@| |i i*@t|U|it @hi ?L| _i?|€i_

Ai UL?|i}h@|L? hit*|t t?} oR6 @hi Et|@?_@h_ ihhLht ? T@hi?|itit
3 4 3 4
fff Eff    6
^5 ' C ff2b Eff D  .HS f fb C + D c bSebbee
kq 

E?@ Effbe EfeS
ffb Eff oR6 
U tLt t}?€U@?| *L?}h? i*@t|U|it uLh ?UL4i @?_ ThUit @?_ @ t}?€U@?|
ihhLhULhhiU|L? |ih4
Ai L|t@4T*i Thi_U|L?t M@ti_ L? |iti it|4@|it @hi L?i t_i_ E€}hi f2
@?_ |i hiUhti L |it|t uLh T@h@4i|ihUL?t|@?U) |it|t t}}it| tL4i@| t|@M*i
i*@t|U|it |hL} bbe E€}hi f 

f
1-step umgs
Forecast

85

6.8

75

6.7

65

1994 1995 1996 1997

6}hi f2G hi_U|i UUh@U)L?|i}h@|L?W4TLh|tN?|i_ 5|@|it

1
1up umgs 5% 1up CHOWs 5%

2

.5
1

1 1990 1991 1992 1993 1994 1995 1.5 1990 1991 1992 1993 1994 1995
Nup umgs 5% Nup CHOWs 5%

1
.5

.5

1 1990 1991 1992 1993 1994 1995 1 1990 1991 1992 1993 1994 1995
Ndn umgs 5% Ndn CHOWs 5%

.5 .5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi f G L Ait|tL?|i}h@|L?W4TLh|tN?|i_ 5|@|it

5Lh|h? 6LhUit AL i T*@? tLh|h? U|@|L?tc i it|4@|i |i T@h@4i
|iht Lu @? ihhLhULhhiU|L? 4L_i* ?U*_?} €i _44) @h@M*it |@| |@!i @ @*i Lu
L?i ? bSbc bSb2c b.2c b.22 @?_ b.e2 Ai it|4@|L? hit*|t @hi

f2
{6| ' nffe{+| ffeDS{oR6| ff 2S2.6c| 
3

Ere Ef . Effb Eff. 
ihi .6 ' 6  .HDD  + n f fHS  oR6 n ?|eoSeR|

-2 ' fS ( 7.- ' 2eHI ** O)TL|itt ET@*i
5@4T*iG bSf bbee 5ih@*W?_iTi?_i?Ui Ef b Lh4@*|) EffS
OL4Lt!i_@t|U|) Ef2f 6?U 6Lh4 EfSf
Ai 4L_i* i T*@?t @ML| |L|h_t Lu |i @h@M*|) Lu |i }hL| h@|i Lu 4TLh|t
E€}hi fe @?_ |i i4ThU@* _t|hM|L? Lu |i hit_@*t t@|t€it |i @tt4T|L?t
4@?|@?i_ uLh it|4@|L? N?*!i |i Thi_U|L?t Lu |i UL?|i}h@|L? t)t|i4c |i
Thi_U|L?t Lu |i ihhLhULhhiU|L? 4L_i* @hi ?L| L?it_i_ |L} |i @h@M*i Mi?}
Thi_U|i_ t |i }hL| h@|i 6?@**)c |i L |it|t E€}hi fD @?_ ULiUi?|
it|4@|it E€}hi fS tTTLh| T@h@4i|ih UL?t|@?U)

Fitted dumgs

.1

0

-.1

1960 1965 1970 1975 1980 1985 1990 1995
Fitted dumgs
Forecast
.05

0

.05

1994 1995 1996 1997

6}hi feG hi_U|i UUh@U),W4TLh|tN?|i_ 5|@|it

f
1
1up CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Ndn CHOWs 5%

.5

1 1990 1991 1992 1993 1994 1995
Nup CHOWs 5%

.5

1990 1991 1992 1993 1994 1995

6}hi fDG L Ait|t  ,W4TLh|tN?|i_ 5|@|it

Constant
1.5 dugdp
0

1
02

04 .5

2 1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dugdp_1 drpm_1

1.5 -.5

1

1990 1991 1992 1993 1994 1995 0 1990 1991 1992 1993 1994 1995
drpm_2 drpm_3

-.25
.5
-.5

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995
dumECM_1 umECM_1

0 0

-.1
-.1
-.2

1990 1991 1992 1993 1994 1995 1990 1991 1992 1993 1994 1995

6}hi fSG bDI @?_t uLh , LiUi?|tW4TLh|tN?|i_ 5|@|it

fe
w *@|ih@* Ah@_i ,^@|L?t 
iU@ti Lh ?|@* it|4@|it Lu Bih4@? @?_ 6hi?U 4TLh| @?_ i TLh| L*4i i^@
|L?t tLi_ ThUi i*@t|U|it |L Mi i |hi4i*) *Lc i @i ?_ih|@!i? uh|ih |it|t
|L |h) |L _i|ih4?i |i hLMt|?itt Lu |t hit*| M) it|4@|?} i^@|L?t uLh Bih4@?
@?_ 6hi?U |h@_i | ?L?,N UL?|hitc @*L?} | tiih@* M*@|ih@* i^@|L?t E? 
L*?} Bih4@? |h@_i | 6h@?Ui @?_ | |i N?|i_ 5|@|it Ai ThUi i*@t|U|)
it|4@|it LM|@?i_ ? |iti @__|L?@* |it|t @hi Thiti?|i_ ? |i |@M*i Mi*L Ai
?i hit*|t U@? Mi t44@h3i_ @t uL**Lt
? |i L*ic |iti @__|L?@* |it|t u@*i_ |L Lih|h? Lh i@h*ih €?_?} |
hitTiU| |L ThUi i*@t|U|it ? |i Bih4@? @?_ 6hi?U 4TLh| i^@|L?t `| L?i
i UiT|L?c ThUi i*@t|U|it ? |i 4TLh| i^@|L?t i|ih @_ |i hL?} t}? ETLt 
|i Lh ihi ?L| t|@|t|U@**) t}?€U@?| Ai i UiT|L? @t ? |i U@ti Lu |i
t?}*ii^@|L? Ew5 it|4@|L? Lu Bih4@? M*@|ih@* 4TLh|t uhL4 6h@?Uic U
)i*_i_ @ t|@|t|U@**) t}?€U@?| i*@t|U|) Lu fS W| 4@) Mi Lh| ?L|?} |@| i*@t
|U|) it|4@|it ? i Uitt Lu f ihi LM|@?i_ ? |i M*@|ih@* i^@|L? uLh Bih4@?
i TLh|t |L 6h@?Ui OLiihc |i it|4@|i t ?t}?€U@?|*) _gihi?| uhL4 3ihL Lhi
?L|iLh|) t |i u@U| |@| |i it|4@|i_ ThUi i*@t|U|it Lu Bih4@? @?_ 6hi?U 
4TLh|t uhL4 ?L?,N UL?|hit @TTi@h |L Mi @ML| |i t@4i E3ihL Lh U*Lti |L | @t
|Lti Lu |i |L|@* 4TLh|t Lu |iti |L UL?|hit
? |i i TLh| t_ic ? UL?|h@t| |L |i hit*|t uLh 4TLh|tc i __ |h? T i_i?Ui
Lu ThUii*@t|U|) Ai UL?i?|L?@* E? |t U@ti M*@|ih@* hi*@|i ThUi |ih4 )i*_i_
@? i*@t|U|) Lu 2 ? t?}*ii^@|L? it|4@|L? uLh Bih4@? i TLh|t |L |i N?|i_
5|@|it OLiihc |i UL?i?|L?@* hi*@|i ThUi |ih4t ThLi_ |L Mi L?*) 4L_ih@|i*) 
}ih uLh Bih4@? @?_ 6hi?U i TLh|t |L ?L?,N UL?|hit Efe @?_ f c hitTiU
|i*) |@? |i) @_ Mii? uLh Bih4@? @?_ 6hi?U i TLh|t |L @** UL?|hit EMi|ii? 
f @?_ f2
? M@*@?Uic |iti hit*|t |i?_ |L tTTLh| |i i |@| Bih4@? @?_ 6hi?U 
4TLh|t @hi hi*@|i*) ThUi ?i*@t|U | |i t@4i |4ic |i) @*tL t}}it| |@| Bih4@?
@?_ 6hi?U i TLh|t @hi 4Lhi ThUi i*@t|U |@? Lh ?|@* it|4@|it ?_U@|i_ 6?@**)c
|i) *i?_ @| 4Lt| L?*) i@! tTTLh| |L |i i |@| ?|h@,hLTi@? |h@_i t *itt
ThUi i*@t|U |@? i |h@,hLTi@? |h@_i

fD
*@|ih@* ,*@t|U|it uLh Bih4@? Ah@_i Ew5
hUi W?UL4i +i*@|i hUi 5|@M*|)
W4TLh|t AL|@* f . oR6 u@*
6hL4 L?,N ff D oR6 u@*
fD 2 oeeo T@tt
6hL4 6h@?Ui fS S oR6 T@tt
6hL4 N5 ff  oR6 T@tt

, TLh|t AL|@* f2 D oR% u@*
AL L?,N fe fH oR% u@*
AL 6h@?Ui 2 f oR% T@tt
AL N5 2 S oR% T@tt

*@|ih@* ,*@t|U|it uLh 6hi?U Ah@_i Ew5
hUi W?UL4i +i*@|i hUi 5|@M*|)
W4TLh|t AL|@* f . oR6 T@tt
6hL4 L?,N f2  oR6 T@tt
S . oeeo T@tt

, TLh|t AL|@* f S oR% u@*
AL L?,N f fS oR% T@tt

fS

Related Interests