Commodity and Manufactures Prices in the Long Run

ByJames M. Boughton

May 1, 1991

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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

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.

Subject: Commodities, Commodity price fluctuations, Commodity price indexes, Commodity prices, Economic sectors, Manufacturing, Prices

Keywords: aggregated commodity-price model, commodities exporter, commodities index, commodity, commodity price, Commodity price fluctuations, Commodity price indexes, Commodity prices, Global, manufactures price, Manufacturing, primary commodity, WP

Pages:
40
Volume:
1991
DOI:
https://doi.org/10.5089/9781451972856.001
Issue:
047
Series:
Working Paper No. 1991/047
Stock No:
WPIEA0471991
ISBN:
9781451972856
ISSN:
1018-5941

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