Reinhart, Carmen and Borenzstein, Eduardo and Khan, Mohsin and Wickham, Peter (1994): The Behavior of Non-Oil Commodity Prices. Published in: IMF Occasional Paper 112 (August 1994): pp. 1-28.
Download (2MB) | Preview
The need to understand the factors that influence the behavior of commodity prices has taken on a special urgency in recent years, as nonoil real commodity prices have been declining almost continuously since the early 1980s. Since their short-lived recovery in 1984, real non-oil commodity prices have fallen by about 45 percent, translating into a sharp deterioration in the terms of trade for most commodity-dependent exporters. As Chart 1 illustrates, in 1992 the price of non-oil commodities relative to that of manufactures reached its lowest level in over 90 years.1 The longterm behavior of real commodity prices would thus appear to lend some support to the well-known Pre bisch-Singer hypothesis.2 This pattern in commodity prices has important practical implications for policymakers. For example, the presence of a negative trend in commodity prices implies continuously worsening terms of trade for many commodity-dependent countries, and further that efforts to stabilize the incomes of producers for an extended period of time may not be financially sustainable.
|Item Type:||MPRA Paper|
|Original Title:||The Behavior of Non-Oil Commodity Prices|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation
|Depositing User:||Carmen Reinhart|
|Date Deposited:||10. Apr 2008 07:16|
|Last Modified:||13. Feb 2013 09:03|
Adams, Charles, Paul R Fenton, and Flemming Larsen, "Potential Output in Major Industrial Countries," in Staff Studies for the World Economic Outlook (Washington: International Monetary Fund, August 1987), pp. 1-38.
Aizenman, Joshua, and Eduardo R Borensztein, "Debt and Conditionality Under Endogenous Terms of Trade Adjustment," NBER Working Paper, No. 2582 (Cambridge, Massachusetts: National Bureau of Economic Research, December 1988), pp. 1-49.
Ardeni, Pier Giorgio, and Brian Wright, "Prebisch- Singer Hypothesis: A Reappraisal Independent of Stationarity Hypothesis," Economic Journal, Vol. 102 (July 1992), pp. 803-12.
Bevan, DL, P. Collier, and J.W. Gunning, "Fiscal Response to a Temporary Trade Shock: lbe Aftermath of the Kenyan Coffee Boom," World Bank Economic Review, Vol. 3 (September 1989), pp. 359-78.
Borensztein, Eduardo, and Carmen M. Reinhart, "The Macroeconomic Determinants of Real Commodity Prices," Staff Papers, International Monetary Fund, Vol. 41 (June 1994), pp. 236-61.
Boughton, James M., "Commodity and Manufactures Prices in the Long Run," IMF Working Paper 91/47 (Washington: International Monetary Fund, May 1991).
Chu, Ke-Young, and Thomas K. Morrison, "The 1981-82 Recession and Non-Oil Primary Commodity Prices," Staff Papers, International Monetary Fund, Vol. 31 (March 1984), pp. 93-140.
___ ., "World Non-Oil Primary Commodity Markets: A Medium-Term Framework of Analysis," Staff Papers, International Monetary Fund, Vol. 33 (March 1986), pp. 139-84.
Claessens, Stijn, and Jonathan Coleman, "Hedging Commodity Price Risks in Papua New Guinea," Working Paper WPS 749 (Washington: World Bank, August 1991).
Cuddington, John T., "Commodity Export Booms in Developing Countries," World Bank Research Observer, Vol. 4 (July 1989), pp. 143-65.
___ .," Long-Run Trends in 26 Primary Commodity Prices: A Disaggregated Look at the Pre bisch- Singer Hypothesis," Journal of Development Economics, Vol. 39 (October 1992), pp. 207-27.
___ , and Carlos M. Urzua, "trends and Cycles in the Net Barter Terms of Trade: A New Approach," Economic Journal, Vol. 99 (June 1989), pp. 426-4
Deaton, Angus S., "Commodity Prices, Stabilization, and Growth in Africa," Research Program in Development Studies, Discussion Paper 166, Princeton University (1992).
___ ., and Guy Laroque, "On the Behaviour of Commodity Prices," Review of Economic Studies, Vel. 59 (1992), pp. 1-23.
Dobozi, Istvan, "The Centrally Planned Economies: Extravagant Consumers," Chap. 5 in World Metal Demand-Trends and Prospects ed. by John E. Tilton (Washington: Resources for the Future, 1990).
Dornbusch, Rudiger, "Policy and Performance Links Between LDC Debtors and Industrial Nations," Brookings Papers on Economic Activity, No. 2 (1985), pp. 303-56.
Duncan, R C., "Market Diversification and Agricultural Export Prospects in Sub-Saharan Africa," in Policy Options for Agricultural Development in Sub- Saharan Africa, ed. by Nathan C. Russell and Christopher R Dowswell (CASIN/SAA/Global 2000, 1993).
Easterly, William, "How Much Do Distortions Affect Growth?" Journal of Monetary Economics, Vol. 32 (November 1993).
Ghosh, Atish, and Jonathan Ostry, "Do Capital Flows Reflect Economic Fundamentals in Developing Countries?," IMF Working Paper 93/34, (Washington: International Monetary Fund, 1993).
___ , "Export Instability and the External Balance in Developing Countries," Staff Papers, International Monetary Fund, Vol. 41 (June 1994), pp. 214-35.
Goldin, Ian, and Odin Knudsen, Agricultural Trade Liberalization: Implications for Developing Countries (Paris: OECD, 1990).
Grilli, Enzo R, and Maw Chang Yang, "Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows," World Bank Economic Review, Vol. 2 (January 1988), pp. 1-47.
Ingham, Barbara M., "Ghana Cocoa Farmers-Income- Expenditure Relationships," Journal of Development Studies, Vol. 9 (April 1973), pp. 365-77.
Lee, Jong-Wha, "International Trade, Distortions, and Long-Run Economic Growth," Staff Papers, International Monetary Fund, Vol. 40 (June 1993), pp. 299-328.
Maizels, Alfred, Commodities in Crisis: The Commodity Crises of the 1980s and the Political Economy of International Commodity Prices (Oxford: Clarendon Press, 1992).
Meadows, Donella, and others, The Limits to Growth: A Report for the Club of Rome's Project on the Predicament of Mankind (New York: Universe Books, 1972).
Newbery, David, and Joseph Stiglitz, The Theory of Commodity Price Stabilization: A Study of the Economics of Risk (Oxford: Clarendon Press, 1981).
Ostry, Jonathan D., and Carmen M. Reinhart, "Private Saving and Terms of Trade Shocks: Evidence from Developing Countries," Staff Papers, International Monetary Fund, Vol. 39 (September 1992), pp. 495-517.
Paxson, Christian H., "Consumption and Income Seasonality in Thailand," Research Program in Development Studies, Discussion Paper No. 150 (Princeton, New Jersey: Woodrow Wilson School of Public and International Affairs, Princeton University, 1992).
Perron, Pierre, "The Great Crash, the Oil Price Shock and the Unit Root Hypothesis," Econometrica, Vol. 57 (November 1989), pp. 1361-401.
Pre bisch, Raul, The Economic Development of Latin America and Its Principal Problems (New York: United Nations, 1950).
Radetzki, Marian, "Developing Countries: The New Growth Markets," Chap. 4 in World Metal Demand-Trends and Prospects, ed. by John E. Tilton (Washington: Resources for the Future,1990).
Reinhart, Carmen M., "Fiscal Policy, the Real Exchange Rate, and Commodity Prices," Staff Papers, International Monetary Fund, Vol. 38 (September 1991), pp.506-24.
____ ., and Peter Wickham, "Commodity Prices: Cyclical Weakness or Secular Decline?," Staff Papers, International Monetary Fund, Vol. 41 (June 1994), pp. 175-213.
Sapsford, David, "The Statistical Debate on the Net Barter Terms of Trade Between Primary Commodities and Manufactures: A Comment and Some Additional Evidence," Economic Journal, Vol. 95 (September 1985), pp. 781-88.
Singer, H.W., "The Distribution of Gains Between Investing and Borrowing Countries," American Economic Review, Vol. 40 (May 1950), pp. 473-85.
Tilton, John E., "The OECD Countries: Demand Trend Setters," Chap. 3 in World Metal Demand-Trends and Prospects, ed. by John E. Tilton (Washington: Resources for the Future, 1990).
World Bank, The East Asian Miracle: Economic Growth and Public Policy (New York: Oxford University Press, 1993).
Young, Alwyn, "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," Sloan School of Management, Massachusetts Institute of Technology (Cambridge, Massachusetts: MIT, 1993).