## The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability

_IMF Working Papers, May 1, 2001_

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## Bibliographic details
- Authors: Paul Cashin, C. John McDermott
- Published: May 1, 2001
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451848991.001

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### Summary and main findings
- Using The Economist's index of industrial commodity prices (the longest dataset publicly available), the paper analyzes real commodity prices over the period 1862-99.
- Two main findings:
  - There has been a downward trend in real commodity prices of 1.3 percent per year over the last 140 years.
  - There is evidence of a ratcheting up in the variability of price movements:
    - The amplitude of price movements increased in the early 1900s.
    - The frequency of large price movements increased after the collapse of the Bretton Woods regime of fixed exchange rates in the early 1970s.
- Conclusion: While a downward trend exists, it is small and completely dominated by the variability of prices, making the trend of little practical policy relevance.

### Data, period, and scope
- Dataset: The Economist's index of industrial commodity prices (described as the longest dataset publicly available).
- Sample period: 1862-99.
- Focus: Behavior of real commodity prices; amplitude and frequency of price movements across long historical periods.

### Key statistics and temporal markers
- Downward trend: 1.3 percent per year.
- Historical periods noted:
  - Early 1900s: increased amplitude of price movements.
  - Early 1970s: increased frequency of large price movements following the collapse of the Bretton Woods regime.
- Time horizon referenced for the trend: "over the last 140 years."

### Subject classification and keywords
- Subject areas: Commodities, Commodity price fluctuations, Commodity price indexes, Commodity prices, Exchange rate arrangements, Foreign exchange, Prices.
- Keywords include: commodity price; Commodity price fluctuations; Commodity price indexes; commodity-price cycle; commodity-price data; cycles; Exchange rate arrangements; price index; price movement; price variability; price volatility; stabilisation scheme; trends; variability; WP.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-long-run-behavior-of-commodity-prices-small-trends-and-big-variability-15096_