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TFP Growth and Commodity Prices in Emerging Economies

Author

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  • Iván Kataryniuk
  • Jaime Martínez-Martín

Abstract

In this article we aim at empirically testing cross-country impacts of commodity prices shocks to aggregate Total Factor Productivity (TFP) growth for a sample of emerging economies. Under a growth accounting framework, we estimate country-specific TFP growth (1992–2014) and select their robust determinants by means of a Bayesian Model Averaging approach. To identify the effects of structural shocks, we propose a panel Bayesian VAR and compute cyclically-adjusted TFP growth net of demand shocks (i.e., output gap) and commodity prices. Our results suggest that: (i) the relationship of commodity prices and TFP growth has been very high in small commodity-exporting economies (i.e., an increase of 10% commodity prices is associated with a sizable expansion of TFP growth in a year for an average commodity exporter); (ii) albeit our evidence is not sufficient to empirically distinguish among theoretical explanations, our results favor an interpretation that weights short-term effects of commodity prices on productivity, either through transitional dynamics to the manufacturing sector or through mismeasurement of TFP; and (iii) cyclically adjusted TFP growth highlights the importance of negative supply shocks in commodity-exporting countries. All in all, much of the increase in TFP growth in the last decade was related to a favorable cyclical environment, a result that may raise significant policy implications for commodity-dependent economies.

Suggested Citation

  • Iván Kataryniuk & Jaime Martínez-Martín, 2019. "TFP Growth and Commodity Prices in Emerging Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(10), pages 2211-2229, August.
  • Handle: RePEc:mes:emfitr:v:55:y:2019:i:10:p:2211-2229
    DOI: 10.1080/1540496X.2018.1520089
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    References listed on IDEAS

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    Cited by:

    1. Gondo, Rocío & Pérez, Fernando, 2018. "The Transmission of Exogenous Commodity and Oil Prices shocks to Latin America - A Panel VAR approach," Working Papers 2018-012, Banco Central de Reserva del Perú.
    2. repec:bde:journl:y:2019:i:6:d:aa:n:14 is not listed on IDEAS

    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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