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An empirical analysis of real commodity price trends: Aggregation, model selection and implications

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  • John T. Cuddington

    (Georgetown University)

Abstract

This paper re-examines the empirical validity of the Prebish-Singer hypothesis of a secular decline in the relative price of primary commodities in terms of manufacturing goods. The empirical findings based on arithmetic and geometric commodity price indices are compared. When Grilli-Yang's arithmetic mean index is employed, the findings regarding commodity price trends are inconclusive. A new geometric mean index, in contrast, yields results that are robust.

Suggested Citation

  • John T. Cuddington, 1992. "An empirical analysis of real commodity price trends: Aggregation, model selection and implications," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 7(2), pages 159-179.
  • Handle: RePEc:emx:esteco:v:7:y:1992:i:2:p:159-179
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    File URL: http://estudioseconomicos.colmex.mx/archivo/EstudiosEconomicos1992/159-179.pdf
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    References listed on IDEAS

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    1. Sapsford, D, 1985. "The Statistical Debate on the Net Barter Terms of Trade between Primary Commodities and Manufactures: A Comment and Some Additional Evidence," Economic Journal, Royal Economic Society, vol. 95(379), pages 781-788, September.
    2. James G. MacKinnon, 1990. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
    3. Spraos, John, 1980. "The Statistical Debate on the Net Barter Terms of Trade between Primary Commodities and Manufactures," Economic Journal, Royal Economic Society, vol. 90(357), pages 107-128, March.
    4. 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.
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    Cited by:

    1. Byrne, Joseph P. & Fazio, Giorgio & Fiess, Norbert, 2013. "Primary commodity prices: Co-movements, common factors and fundamentals," Journal of Development Economics, Elsevier, vol. 101(C), pages 16-26.
    2. José Antonio Ocampo & María Angela Parra, 2004. "The commodity terms of trade and their strategic implications for development," International Trade 0403001, EconWPA.
    3. Cuddington, John T. & Ludema, Rodney & Jayasuriya, Shamila A, 2002. "Prebisch-Singer Redux," Working Papers 15857, United States International Trade Commission, Office of Economics.
    4. Francesca Di Iorio & Stefano Fachin, 2018. "The Prebish-Singer hypothesis in the post-colonial era: evidence from panel cointegration," DSS Empirical Economics and Econometrics Working Papers Series 2018/1, Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome.
    5. Yamada, Hiroshi & Yoon, Gawon, 2014. "When Grilli and Yang meet Prebisch and Singer: Piecewise linear trends in primary commodity prices," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 193-207.
    6. repec:eee:ecolet:v:166:y:2018:i:c:p:86-89 is not listed on IDEAS
    7. Byrne, Joseph P & Fazio, Giorgio & Fiess, Norbert, 2010. "Optimism and commitment: An elementary theory of bargaining and war," SIRE Discussion Papers 2010-102, Scottish Institute for Research in Economics (SIRE).
    8. Fernandez, Viviana, 2012. "Trends in real commodity prices: How real is real?," Resources Policy, Elsevier, vol. 37(1), pages 30-47.

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