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Cuadernos de Economía

Print version ISSN 0121-4772

Abstract

BOUNDI CHRAKI, Fahd. Determinants of the real terms of trade between Spain and Germany (1970-2010). An econometric analysis of absolute cost advantage. Cuad. Econ. [online]. 2017, vol.36, n.71, pp.489-520. ISSN 0121-4772.  https://doi.org/10.15446/cuad.econ.v36n71.48664.

The main aim of this paper is to analyse the determinants of the real terms of trade between Spain and Germany during the 1970-2010 period. In order to do so, we have used unit root and cointegration tests, in which our theoretical frame-work is the absolute cost advantage that was developed by Anwar Shaikh. Finally, our econometric analysis discovered that the real effective rate exchange between Spain and Germany is, in the long term, subject to the real unit labour costs of manufacturing sectors.

JEL: B51, C01, F10, F20.

Keywords : Absolute cost advantage; real terms of trade; relative unit labour cost; unit root test; cointegration.

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