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The Impact of Exchange Rates and Developing Country Debt on Commodity Prices

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Author Info
Gilbert, Christopher L
Abstract

A general appreciation of the dollar will result in a corresponding fall in the dollar prices of primary commodities. The elasticity with respect to the value of the dollar will depend on supply and demand elasticities and on shares in world production and consumption of the commodity, but should be in the zero-one interval. Published estimates have indicated substantially greater elasticities, implying excess volatility of primary commodity prices. The author shows that this apparent excess volatility may be accounted for in terms of use of an inappropriate exchange rate index and through omission of wealth effects on LDCs associated with dollar-denominated debt. Copyright 1989 by Royal Economic Society.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 99 (1989)
Issue (Month): 397 (September)
Pages: 773-84
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Handle: RePEc:ecj:econjl:v:99:y:1989:i:397:p:773-84

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  1. Patricio Jaramillo & Sergio Lehmann & David Moreno., 2009. "China, Precios de Commodities y Desempeño de América Latina: Algunos Hechos Estilizados," Cuadernos de Economía (Latin American Journal of Economics), Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 46(133), pages 67-105. [Downloadable!]
  2. Luca Pieroni & Matteo Ricciarelli, 2005. "Modelling Dynamic Storage Function in Commodity Markets:Theory and Evidence," Quaderni del Dipartimento di Economia, Finanza e Statistica 11/2005, Università di Perugia, Dipartimento Economia, Finanza e Statistica. [Downloadable!]
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  3. Sergio Lehmann & David Moreno & Patricio Jaramillo, 2007. "China, Commodity Prices and Latin American Performance: A Few Stylized Facts," Working Papers Central Bank of Chile 424, Central Bank of Chile. [Downloadable!]
  4. Gilbert, Christopher L., 1990. "The rational expectations hypothesis in models of primary commodity prices," Policy Research Working Paper Series 384, The World Bank. [Downloadable!]
  5. Serge Calabre, 2003. "La dynamique des prix et des marchés de matières premières : analyses univariées versus faits stylisés analytiques," Mondes en développement, De Boeck Université, vol. 122(2), pages 21-35. [Downloadable!]
  6. Reinhart, Carmen, 1991. "Fiscal Policy, the Real Exchange Rate, and Commodity Prices," MPRA Paper 8197, University Library of Munich, Germany. [Downloadable!]
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  7. Reinhart, Carmen & Borenzstein, Eduardo, 1994. "The Macroeconomic Determinants of Commodity Prices," MPRA Paper 6979, University Library of Munich, Germany. [Downloadable!]
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  8. Boum-Jong Choe, 1990. "The metals price boom of 1987-89 : the role of supply disruptions and stock changes," Policy Research Working Paper Series 542, The World Bank. [Downloadable!]
  9. Reinhart, Carmen & Borensztein, Eduardo, 1994. "The determinants of commodity prices," MPRA Paper 13870, University Library of Munich, Germany. [Downloadable!]
  10. Reinhart, Carmen, 1990. "Fiscal policy, the real exchange rate and commodity prices: A global framework," MPRA Paper 14102, University Library of Munich, Germany. [Downloadable!]
  11. Melisso Boschi & Luca Pieroni, 2008. "Aluminium market and the macroeconomy," Quaderni del Dipartimento di Economia, Finanza e Statistica 42/2008, Università di Perugia, Dipartimento Economia, Finanza e Statistica. [Downloadable!]
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  12. Palaskas, Theodosios & Varangis, Panos, 1989. "Primary commodity prices and macroeconomic variables : a long run relationship," Policy Research Working Paper Series 314, The World Bank. [Downloadable!]
  13. Bastourre, Diego, 2008. "Cambio fundamental o especulación financiera en los mercados de commodities? Un modelo con ajuste no lineal al equilibrio
    [Structural break or financial speculation in commodity markets? A multiva    ," MPRA Paper 9910, University Library of Munich, Germany. [Downloadable!]
  14. Kausik Chaudhuri, 2000. "Long Run Prices of Primary Commodities and Oil Prices," Working Papers 2000-2, University of Sydney, Department of Economics. [Downloadable!]
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  15. Burger, Kees & Smit, Hidde & Vogelvang, Ben, 2002. "Exchange Rates and Natural Rubber Prices, the Effect of the Asian Crisis," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24958, European Association of Agricultural Economists. [Downloadable!]
  16. Paul Cashin & C. John McDermott, 2001. "The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability," IMF Working Papers 01/68, International Monetary Fund. [Downloadable!]
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