The Long-Run Behaviour of the Terms of Trade between Primary Commodities and Manufactures
AbstractThis study examines the Prebisch and Singer hypothesis using a panel of 24 commodity prices from 1900 to 2010. The modelling approach stems from the need to meet two key concerns: (1) the presence of cross-sectional dependence among commodity prices; and (2) the identification of potential structural breaks. To address these concerns, the Hadri and Rao test (2008) is employed. The findings suggest that all commodity prices exhibit a structural break at different locations across series, and that support for the Prebisch and Singer hypothesis is mixed. Once the breaks are removed from the underlying series, the persistence of commodity price shocks is shorter than that obtained in other studies using alternative methodologies.
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Bibliographic InfoPaper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper WP2011/71.
Date of creation: 2011
Date of revision:
Prebisch and Singer hypothesis; panel stationarity;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
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