How Persistent Are Shocks to World Commodity Prices?

Author/Editor:

Hong Liang ; C. John McDermott ; Paul Cashin

Publication Date:

June 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the persistence of shocks to world commodity prices, using monthly IMF data on primary commodities between 1957–98. We find that shocks to commodity prices are typically long–lasting and the variability of the persistence of price shocks is quite wide. The paper also discusses the implications of these findings for national and international schemes to stabilize earnings from commodity exports and finds that if price shocks are long–lived, then the cost of stabilization schemes will likely exceed any associated smoothing benefits.

Series:

Working Paper No. 1999/080

Subject:

Agricultural commodities Commodities Commodity price shocks Commodity prices International commodity agreements International trade Prices

English

Publication Date:

June 1, 1999

ISBN/ISSN:

9781451850284/1018-5941

Stock No:

WPIEA0801999

Pages:

54

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