Friedman's hypothesis. In response to a negative terms-of-trade shock, countries with fixed regimes experience large and …

permanent component of the terms of trade may lead to higher rates of private savings. Agénor and Aizenman examine the extent to … which permanent terms-of-trade shocks have an asymmetric effect on private savings. Using a simple three-period model, they … long trough rather than a sharp peak), savings rates will respond asymmetrically to favorable movements in the permanent …