What can we learn from primary commodity prices series which is useful to policymakers in resource-rich countries?
AbstractThis paper investigates the properties of real commodity prices from the per- spective of policy makers seeking to conduct a successful ?scal policy in resource- rich countries. We found that policy makers face three potential challenges: (1) secular decline of real commodity prices, the so-called Prebish-Singer (PS) hypoth- esis, (2) real commodity prices are characterised by long-cycles, (3) and relative high volatility of real commodity prices. Employing recent and powerful econo- metrics/statistical techniques, we found that real commodity prices are mean re- verting, declining over time, have long cycles and relatively high volatility and this volatility is time varying. We summarised the most successful solutions to these three challenges faced by policy makers including the countercyclical structural budget technique pioneered by Chile.
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Bibliographic InfoPaper provided by Queen's University Management School in its series Working Papers with number 0001.
Length: 17 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
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More information through EDIRC
resource-rich countries; Prebish-Singer Hypothesis; Cycles and Volatil- ity of Real Commodity Prices ; Panel data; Structural Change; Fiscal Policy; Structural Budget;
Find related papers by JEL classification:
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
- N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-25 (All new papers)
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