Dennis, Benjamin; Iscan, Talan - Department of Economics, Dalhousie University - 2002
This paper analyzes income and consumption risk resulting from fluctuations in the terms-of-trade in a small open … adjustment costs and moderate degrees of terms-of-trade volatility. When sector-specific risks are uninsurable, factor immobility … is comparable to the aggregate welfare costs that a frictionless economy would experience as a result of terms-of-trade …