The Influence Of Fluctuation Of Terms Of Trade To The Trade Balance

Terms of Trade has been a classic international trade theory.As has beendeveloped by scholars of several generations, this theory has gained a lot moreepitaxial, namely, Income Terms of Trade (ITT) and Factorial Terms of Trade (FTT),compared with its oriental version, Net Barter Terms of Trade (NBTT) and it has beenoffering guide to the evaluation of trade and policy making. With the time heading onand on, and the economy of global society making significant progress, the worldwidesupply-need situation has been changed. Most of the world’s economies havedeveloped from supply-limited economies to need-limited ones. The turning point ofChina, according to Prof. Liu Wei, took place between1995and1996. Everyeconomic theory has its background assumptions. When the assumptions no longerexist, the theory has to be adjusted or it would cause trouble. Via cliometrics methods,we can test them and even improve them to get them up-to-date. Owing to the writer’sown limitation, only the testing part is involved in this thesis.As for the possiblyexisting part of improvement of the theory would have to be left to my people of thesame occupation. To be exact, I have to mention that, this thesis takes net barter termsof trade (NBTT) as an example because it is easier and more accurate to estimatecomparing to ITT and FTT, and China mainland, Japan and the U.S.A. as targeteconomies.This thesis is built on the foundation of works of senior scholars. The writersearched numerous papers and articles to get data of NBTT calculated by seniorscholars and trade balance data from the official website of China Statistic Bureau andthat from websites of Japan Ministry of Finance and United States Cencus Bureau andbrought them to the eviews6.0software to reorganize and analyze them to see theircorrelations. The hypothesis is, if the NBTT and the trade balance data had positivecorrelation, the Terms of Trade Theory is practical under need-limited economy; if theresult turned out the other way round or they don’t appear any correlations, the theoryhas to be adjusted. And for the latter one, we may not take the theory as a properstandard to evaluate trade performance or to guide trade policy making.