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How is a country affected by changes in the world price of commodities that it exports and imports?
Determines the effect of a change in the world price of a commodity on the value of a country's exports and imports as a percent of GDP.
- Value of exports and imports of a commodity
- Proportional change in world price of exports and imports over time
|xi||value of export i|
|mi||value of import i|
|Δ pi / pi||proportional change in the world price of export or import i, depending on if it is preceded by x (exports) or m (imports).|
|GDP||gross domestic product of the country|
The analysis can be applied to individual commodities or to broad categories.
Estimates a percentage effect on GDP from a change in world commodity prices.