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Weathering the storm: a characterization of the recent terms-of-trade shock in Italy

Author

Listed:
  • Claire Giordano

    (Bank of Italy)

  • Enrico Tosti

    (Bank of Italy)

Abstract

This study analyses the negative shock to Italy's terms of trade since the second half of 2021: the shock was less pronounced than the 1973-74 oil crisis, yet particularly sharp. The terms-of-trade deterioration was driven by energy goods and was greater than in the other euro-area economies due to a higher rise in energy import prices and to a greater share of energy products in total imports. The energy component was also the main driver both of the strong deterioration in the current account balance and of the large negative income effect. At any rate, Italy has successfully weathered the storm: the gradual recovery in the terms of trade since 2022 has led to the return to a positive current account balance and to a positive income effect.

Suggested Citation

  • Claire Giordano & Enrico Tosti, 2024. "Weathering the storm: a characterization of the recent terms-of-trade shock in Italy," Questioni di Economia e Finanza (Occasional Papers) 831, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_831_24
    as

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    References listed on IDEAS

    as
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    4. Mick Silver, 2009. "Do Unit Value Export, Import, and Terms-of-Trade Indices Misrepresent Price Indices?," IMF Staff Papers, Palgrave Macmillan, vol. 56(2), pages 297-322, June.
    5. Coral García Esteban & Ana Gómez Loscos & César Martín Machuca, 2023. "Recent developments in goods imports in light of certain determinants," Economic Bulletin, Banco de España, issue 2023/Q2.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    terms of trade; energy prices; energy shock;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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