Routledge Dictionary of Economics, Second Edition
factorial terms of trade (F1)
The NET BARTER TERMS OF TRADE multiplied by the PRODUCTIVITY change in a country’s export industries (single factorial terms) or by the ratio of the index of productivity change of the country’s export industries to the corresponding index for the foreign export industries producing its imports (double factorial terms).
This modification of the net barter terms of trade is made to show the welfare effects of the terms of trade, because an increase in productivity, for example, which worsens a country’s terms of trade indicates that it is sharing its productivity gain with another country
See also: terms of trade
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