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How Persistent Are Shocks to World Commodity Prices?

  • Paul Cashin

    (International Monetary Fund)

  • Hong Liang

    (International Monetary Fund)

  • C. John McDermott

    (International Monetary Fund)

This paper examines the persistence of shocks to world commodity prices, using monthly IMF data on primary commodities between 1957-98. We find that shocks to commodity prices are typically long-lasting and the variability of the persistence of price shocks is quite wide. The paper also discusses the implications of these findings for national and international schemes to stabilize earnings from commodity exports and finds that if price shocks are long-lived, then the cost of stabilization schemes will likely exceed any associated smoothing benefits. Copyright 2000, International Monetary Fund

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Article provided by Palgrave Macmillan in its journal IMF Staff Papers.

Volume (Year): 47 (2000)
Issue (Month): 2 ()
Pages: 2

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Handle: RePEc:pal:imfstp:v:47:y:2000:i:2:p:2
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  1. Reinhart, Carmen & Borensztein, Eduardo, 1994. "The Macroeconomic Determinants of Commodity Prices," MPRA Paper 6979, University Library of Munich, Germany.
  2. Rudebusch, Glenn D, 1992. "Trends and Random Walks in Macroeconomic Time Series: A Re-examination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 661-80, August.
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  14. repec:ltr:wpaper:1992.17 is not listed on IDEAS
  15. Javier Le´┐ŻN & Raimundo Soto, 1997. "Structural Breaks And Long-Run Trends In Commodity Prices," Journal of International Development, John Wiley & Sons, Ltd., vol. 9(3), pages 347-366.
  16. Bardsley, Peter, 1994. "The Collapse of the Australian Wool Reserve Price Scheme," Economic Journal, Royal Economic Society, vol. 104(426), pages 1087-1105, September.
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