IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-1990-088.html
   My bibliography  Save this paper

Commodity Price Fluctuations and Macro-economic Adjustments in the Developed Countries

Author

Listed:
  • Walter C. Labys
  • Alfred Maizels

Abstract

Commodity price fluctuations have been troublesome in their destabilising effects on the foreign exchange earnings of developing countries. Recently, however, attention has been drawn to their role in transmitting inflation and in inducing macroeconomic and financial adjustments in the developed countries. These adjustments range from changes in employment and output (including the business cycle) to changes in money supply, interest rates and exchange rates.

Suggested Citation

  • Walter C. Labys & Alfred Maizels, 1990. "Commodity Price Fluctuations and Macro-economic Adjustments in the Developed Countries," WIDER Working Paper Series wp-1990-088, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-1990-088
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/WP88.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gandolfi, Arthur E & Lothian, James R, 1983. "International Price Behavior and the Demand for Money," Economic Inquiry, Western Economic Association International, vol. 21(3), pages 295-311, July.
    2. Beckerman, Wilfred & Jenkinson, Tim, 1986. "What Stopped the Inflation? Unemployment of Commodity Prices?," Economic Journal, Royal Economic Society, vol. 96(381), pages 39-54, March.
    3. Bordo, Michael David, 1980. "The Effects of Monetary Change on Relative Commodity Prices and the Role of Long-Term Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1088-1109, December.
    4. Jon Harkness, 1982. "Intermediate Imports, Expectations and Stochastic Equilibrium under Flexible Exchange Rates," Canadian Journal of Economics, Canadian Economics Association, vol. 15(1), pages 118-143, February.
    5. Roy H. Webb, 1988. "Commodity prices as predictors of aggregate price change," Economic Review, Federal Reserve Bank of Richmond, vol. 74(Nov), pages 3-11.
    6. Golub, Stephen S, 1983. "Oil Prices and Exchange Rates," Economic Journal, Royal Economic Society, vol. 93(371), pages 576-593, September.
    7. Pierce, David A. & Haugh, Larry D., 1977. "Causality in temporal systems : Characterization and a survey," Journal of Econometrics, Elsevier, vol. 5(3), pages 265-293, May.
    8. Van Duyne, Carl, 1979. "The macroeconomic effects of commodity market disruptions in open economies," Journal of International Economics, Elsevier, vol. 9(4), pages 559-582, November.
    9. Moutos, Thomas & Vines, David, 1992. "Output, Inflation and Commodity Prices," Oxford Economic Papers, Oxford University Press, vol. 44(3), pages 355-372, July.
    10. Rendigs Fels & C. Elton Hinshaw, 1968. "Forecasting and Recognizing Business Cycle Turning Points," NBER Books, National Bureau of Economic Research, Inc, number fels68-1, March.
    11. Francesco Giavazzi & Alberto Giovannini, 1987. "Exchange rates and prices in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 123(4), pages 592-605, December.
    12. Wiliam D. Nordhaus & John B. Shoven, 1977. "A Technique for Analyzing and Decomposing Inflation," NBER Chapters, in: Analysis of Inflation: 1965–1974, pages 333-360, National Bureau of Economic Research, Inc.
    13. Koch, Paul D. & Rosenweig, Jeffrey A. & Whitt, Joseph Jr, 1988. "The dynamic relationship between the dollar and US prices: An intensive empirical investigation," Journal of International Money and Finance, Elsevier, vol. 7(2), pages 181-204, June.
    14. van Wijnbergen, Sweder, 1985. "Primary Commodity Prices, the Business Cycle and the Real Exchange Rate of the Dollar," CEPR Discussion Papers 90, C.E.P.R. Discussion Papers.
    15. Oliver Jean Blanchard, 1987. "Aggregate and Individual Price Adjustment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1), pages 57-122.
    16. Geary, Patrick T & Kennan, John, 1982. "The Employment-Real Wage Relationship: An International Study," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 854-871, August.
    17. Pagano, Marco, 1985. "Relative price variability and inflation : The Italian evidence," European Economic Review, Elsevier, vol. 29(2), pages 193-223.
    18. Darby, Michael R, 1982. "The Price of Oil and World Inflation and Recession," American Economic Review, American Economic Association, vol. 72(4), pages 738-751, September.
    19. Robert E. Hall, 1982. "Introduction to "Inflation: Causes and Effects"," NBER Chapters, in: Inflation: Causes and Effects, pages 1-10, National Bureau of Economic Research, Inc.
    20. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    21. International Monetary Fund, 1984. "Exchange Rate Volatility and World Trade," IMF Occasional Papers 1984/005, International Monetary Fund.
    22. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
    23. Joel Popkin, 1977. "Analysis of Inflation: 1965–1974," NBER Books, National Bureau of Economic Research, Inc, number popk77-1, March.
    24. Michael Wattleworth, 1988. "The Effects of Collective Devaluation on Commodity Prices and Exports," IMF Staff Papers, Palgrave Macmillan, vol. 35(1), pages 166-180, March.
    25. Thirlwall, A. P. & Bergevin, J., 1985. "Trends, cycles and asymmetries in the terms of trade of primary commodities from developed and less developed countries," World Development, Elsevier, vol. 13(7), pages 805-817, July.
    26. Sargent, Thomas J, 1978. "Estimation of Dynamic Labor Demand Schedules under Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1009-1044, December.
    27. Winters, L Alan, 1987. "Models of Primary Price Indices," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(3), pages 307-322, August.
    28. Friedman, Milton & Schwartz, Anna J., 1982. "Interrelations between the United States and the United Kingdom, 1873-1975," Journal of International Money and Finance, Elsevier, vol. 1(1), pages 3-19, January.
    29. Kaldor, Nicholas [Lord], 1976. "Inflation and Recession in the World Economy," Economic Journal, Royal Economic Society, vol. 86(344), pages 703-714, December.
    30. Labys, Walter C. & Maizels, Alfred, 1990. "Commodity Price Fluctuations and Macro-economic Adjustments in the Developed Countries," WIDER Working Papers 295623, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    31. Stock, James H. & Watson, Mark W., 1989. "Interpreting the evidence on money-income causality," Journal of Econometrics, Elsevier, vol. 40(1), pages 161-181, January.
    32. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    33. Burbidge, John & Harrison, Alan, 1984. "Testing for the Effects of Oil-Price Rises Using Vector Autoregressions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(2), pages 459-484, June.
    34. Geweke, John & Meese, Richard & Dent, Warren, 1983. "Comparing alternative tests of causality in temporal systems : Analytic results and experimental evidence," Journal of Econometrics, Elsevier, vol. 21(2), pages 161-194, February.
    35. Sebastian Edwards, 1986. "Commodity Export Prices and the Real Exchange Rate in Developing Countries: Coffee in Colombia," NBER Chapters, in: Economic Adjustment and Exchange Rates in Developing Countries, pages 233-266, National Bureau of Economic Research, Inc.
    36. Alfred Maizels, 1988. "The Impact of Currency Devaluation on Commodity Production and Exports of Developing Countries," Palgrave Macmillan Books, in: Sidney Dell (ed.), Policies for Development, chapter 9, pages 187-205, Palgrave Macmillan.
    37. Hirotugu Akaike, 1969. "Fitting autoregressive models for prediction," Annals of the Institute of Statistical Mathematics, Springer;The Institute of Statistical Mathematics, vol. 21(1), pages 243-247, December.
    38. Symons, James S V, 1985. "Relative Prices and the Demand for Labour in British Manufacturing," Economica, London School of Economics and Political Science, vol. 52(205), pages 37-49, February.
    39. Klein, Philip A., 1986. "Leading indicators of inflation in market economies," International Journal of Forecasting, Elsevier, vol. 2(4), pages 403-412.
    40. International Monetary Fund, 1988. "Commodity Prices As a Leading Indicator of Inflation," IMF Working Papers 1988/087, International Monetary Fund.
    41. Hall, S G, 1986. "An Application of the Granger & Engle Two-Step Estimation Procedure to United Kingdom Aggregate Wage Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 229-239, August.
    42. Knut Anton Mork & Robert E. Hall, 1980. "Energy Prices, Inflation, and Recession, 1974-1975," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 31-64.
    43. Symons, J & Layard, R, 1984. "Neoclassical Demand for Labour Functions for Six Major Economies," Economic Journal, Royal Economic Society, vol. 94(376), pages 788-799, December.
    44. Milton Friedman & Anna J. Schwartz, 1982. "Velocity and the Interrelations between the United States and the United Kingdom," NBER Chapters, in: Monetary Trends in the United States and United Kingdom: Their Relation to Income, Prices, and Interest Rates, 1867–1975, pages 305-341, National Bureau of Economic Research, Inc.
    45. Domberger, Simon, 1987. "Relative Price Variability and Inflation: A Disaggregated Analysis," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 547-566, June.
    46. Firth, Michael, 1979. "The Relationship between Stock Market Returns and Rates of Inflation," Journal of Finance, American Finance Association, vol. 34(3), pages 743-749, June.
    47. Frederick T. Furlong, 1989. "Commodity prices as a guide for monetary policy," Economic Review, Federal Reserve Bank of San Francisco, issue Win, pages 21-38.
    48. Michael Finger & Dean DeRosa, 1978. "Commodity‐Price Stabilisation and the Ratchet Effect," The World Economy, Wiley Blackwell, vol. 1(2), pages 195-204, January.
    49. Surrey, M J C, 1989. "Money, Commodity Prices and Inflation: Some Simple Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(3), pages 219-238, August.
    50. James M. Boughton & William H. Branson, 1988. "Commodity Prices as a Leading Indicator of Inflation," NBER Working Papers 2750, National Bureau of Economic Research, Inc.
    51. Larry D. Haugh & David A. Pierce, 1977. "Causality in temporal systems: characterizations and a survey," Special Studies Papers 87, Board of Governors of the Federal Reserve System (U.S.).
    52. Fama, Eugene F. & Schwert, G. William, 1977. "Asset returns and inflation," Journal of Financial Economics, Elsevier, vol. 5(2), pages 115-146, November.
    53. Robert E. Hall, 1982. "Inflation: Causes and Effects," NBER Books, National Bureau of Economic Research, Inc, number hall82-1, March.
    54. Thomas K. Morrison & Michael Wattleworth, 1988. "The 1984-86 Commodity Recession: Analysis of Underlying Causes," IMF Staff Papers, Palgrave Macmillan, vol. 35(2), pages 371-381, June.
    55. Maizels, Alfred, 1987. "Commodities in crisis: An overview of the main issues," World Development, Elsevier, vol. 15(5), pages 537-549, May.
    56. Bruno, Michael, 1982. " Adjustment and Structural Change under Supply Shocks," Scandinavian Journal of Economics, Wiley Blackwell, vol. 84(2), pages 199-221.
    57. Guilkey, David K & Salemi, Michael K, 1982. "Small Sample Properties of Three Tests for Granger-Causal Ordering in a Bivariate Stochastic System," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 668-680, November.
    58. Cathy L. Jabara & Nancy E. Schwartz, 1987. "Flexible Exchange Rates and Commodity Price Changes: The Case of Japan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(3), pages 580-590.
    59. Joel Popkin, 1977. "Introduction to "Analysis of Inflation: 1965–1974"," NBER Chapters, in: Analysis of Inflation: 1965–1974, pages 1-10, National Bureau of Economic Research, Inc.
    60. Richard N. Cooper & Robert Z. Lawrence, 1975. "The 1972-75 Commodity Boom," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(3), pages 671-724.
    61. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-228, August.
    62. Dean A. DeRosa & Victoria S. Farrell & T. Ashby McCown, 1983. "Effects of exchange rate variability on international trade and other economic variables : a review of the literature," Staff Studies 130, Board of Governors of the Federal Reserve System (U.S.).
    63. Peter Berck & Stephen G. Cecchetti, 1985. "Portfolio Diversification, Futures Markets, and Uncertain Consumption Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 497-507.
    64. Jeffrey A. Frankel, 1986. "Expectations and Commodity Price Dynamics: The Overshooting Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 344-348.
    65. Oskar Morgenstern, 1959. "International Financial Transactions and Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number morg59-1, March.
    66. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, vol. 62(4), pages 540-552, September.
    67. Neftci, Salih N, 1984. "Are Economic Time Series Asymmetric over the Business Cycle?," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 307-328, April.
    68. Moghadam, Valentine M., 1990. "Gender and Restructuring," WIDER Working Papers 295622, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    69. Valentine M. Moghadam, 1990. "Gender and Restructuring: Perestroika, the 1989 Revolutions, and Women," WIDER Working Paper Series wp-1990-087, World Institute for Development Economic Research (UNU-WIDER).
    70. Hsiao, Cheng, 1981. "Autoregressive modelling and money-income causality detection," Journal of Monetary Economics, Elsevier, vol. 7(1), pages 85-106.
    71. Roll, Richard, 1973. "Assets, Money, and Commodity Price Inflation Under Uncertainty: Demand Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 5(4), pages 903-923, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Salih, Siddig A. & Branson, William H. & Ebraheem, Yusuf H. Al, "undated". "Oil Driven Macroeconometric Model of Kuwait," WIDER Working Papers 295624, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    2. Ardo H. Hansson, 1991. "The Importance of Being Earnest: Early Stages of the West German Wirtschaftswunder," WIDER Working Paper Series wp-1991-094, World Institute for Development Economic Research (UNU-WIDER).
    3. Herman de Kwaatsteniet, 2011. "Demand Variability in Supply Chains: The Influence of Global developments and Globalization on the Local Dutch Steel Industry," Working Papers 2011/32, Maastricht School of Management.
    4. Jena, Pratap Kumar, 2015. "Commodity Prices and Macroeconomic Variables in India: An Auto-Regressive Distributed Lag (ARDL) Approach," MPRA Paper 73892, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. S. Gurcan Gulen, 1996. "Is OPEC a Cartel? Evidence from Cointegration and Causality Tests," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 43-57.
    2. Abdur R. Chowdhury, 1991. "A Causal Analysis of Defense Spending and Economic Growth," Journal of Conflict Resolution, Peace Science Society (International), vol. 35(1), pages 80-97, March.
    3. Fatai, K & Oxley, Les & Scrimgeour, F.G, 2004. "Modelling the causal relationship between energy consumption and GDP in New Zealand, Australia, India, Indonesia, The Philippines and Thailand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 64(3), pages 431-445.
    4. Noel D. Uri, 1996. "The Impact of Crude Oil Price Volatility on Agricultural Employment in the United States," Energy & Environment, , vol. 7(1), pages 57-74, February.
    5. James M. Boughton & William H. Branson, 1988. "Commodity Prices as a Leading Indicator of Inflation," NBER Working Papers 2750, National Bureau of Economic Research, Inc.
    6. Yoo, Seung-Hoon & Kim, Yeonbae, 2006. "Electricity generation and economic growth in Indonesia," Energy, Elsevier, vol. 31(14), pages 2890-2899.
    7. Zhao, Xiaoli & Ma, Qian & Yang, Rui, 2013. "Factors influencing CO2 emissions in China's power industry: Co-integration analysis," Energy Policy, Elsevier, vol. 57(C), pages 89-98.
    8. Odhiambo, Nicholas M., 2009. "Energy consumption and economic growth nexus in Tanzania: An ARDL bounds testing approach," Energy Policy, Elsevier, vol. 37(2), pages 617-622, February.
    9. Edgardo Sica, 2007. "Causality between Energy and Economic Growth: the Italian case," Quaderni DSEMS 03-2007, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
    10. Seung-Hoon Yoo, 2007. "Urban Water Consumption and Regional Economic Growth: The Case of Taejeon, Korea," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 21(8), pages 1353-1361, August.
    11. Utku Utkulu & Durmus Özdemir, 2005. "Does Trade Liberalization Cause a Long Run Economic Growth in Turkey," Economic Change and Restructuring, Springer, vol. 37(3), pages 245-266, September.
    12. Cheng, Benjamin S. & Lai, Tin Wei, 1997. "An investigation of co-integration and causality between energy consumption and economic activity in Taiwan," Energy Economics, Elsevier, vol. 19(4), pages 435-444, October.
    13. McCrorie, J. Roderick & Chambers, Marcus J., 2006. "Granger causality and the sampling of economic processes," Journal of Econometrics, Elsevier, vol. 132(2), pages 311-336, June.
    14. Belke, Ansgar H. & Bordon, Ingo G. & Hendricks, Torben W., 2014. "Monetary policy, global liquidity and commodity price dynamics," The North American Journal of Economics and Finance, Elsevier, vol. 28(C), pages 1-16.
    15. Ralf Ostermark, 1998. "Multivariate Granger causality in international asset pricing: evidence from the Finnish and Japanese financial economies," Applied Financial Economics, Taylor & Francis Journals, vol. 8(1), pages 67-72.
    16. Masih, Abul M. M. & Masih, Rumi, 1996. "Empirical tests to discern the dynamic causal chain in macroeconomic activity: new evidence from Thailand and Malaysia based on a multivariate cointegration/vector error-correction modeling approach," Journal of Policy Modeling, Elsevier, vol. 18(5), pages 531-560, October.
    17. Shih-wen Hu & Ching-chong Lai & Vey Wang, 1999. "Monetary Announcement and Commodity Price Dynamics: A Portfolio Balance Model," The American Economist, Sage Publications, vol. 43(1), pages 71-81, March.
    18. Masih, Rumi & Masih, Abul M. M., 1996. "Macroeconomic activity dynamics and Granger causality: New evidence from a small developing economy based on a vector error-correction modelling analysis," Economic Modelling, Elsevier, vol. 13(3), pages 407-426, July.
    19. Tsai, Grace Yueh-Hsiang, 1989. "A dynamic model of the U.S. cotton market with rational expectations," ISU General Staff Papers 1989010108000012168, Iowa State University, Department of Economics.
    20. John D. Levendis, 2018. "Time Series Econometrics," Springer Texts in Business and Economics, Springer, number 978-3-319-98282-3, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:wp-1990-088. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.