Commodity and Manufactures Prices in the Long Run

Author/Editor:

James M. Boughton

Publication Date:

May 1, 1991

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:

The low level of primary commodity prices since 1985 is examined in the context of the behavior of those prices relative to prices of manufactured goods since 1854. The Prebisch-Singer hypothesis of a secular decline in relative commodity prices is sustained, but the recent decline is shown to be well outside the realm of historical experience. Commodity and manufactures prices are found to be cointegrated, conditional on the negative trend and a number of unexplained short-term swings. The earlier finding of a Gibson paradox is explained in terms of the difference between short- and long-run relationships.

Series:

Working Paper No. 91/47

English

Publication Date:

May 1, 1991

ISBN/ISSN:

9781451972856/1018-5941

Stock No:

WPIEA0471991

Format:

Paper

Pages:

40

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