Abstract:Previous studies have mostly focused on the relationship between macroeconomic shocks and trade balance adjustments of resource-rich countries while largely overlooked countries with trade composition of high resource-export and strong import-dependence such as Papua New Guinea. Utilising a Bayesian Vector Autoregressive (BVAR) model, we quantify the relative importance of macroeconomic shocks on the country's trade balance adjustments and examine how they evolve over time. Our identification strategy takes ad… Show more
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