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Does the Commodity Super Cycle Matter?

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  • Andrés Fernández
  • Stephanie Schmitt-Grohé
  • Martin Uribe

Abstract

This paper investigates empirically the role of the commodity price super cycle in explaining real activity in developed and emerging economies. The commodity price super cycle is defined as a common permanent component in real commodity prices. Estimates using quarterly and annual data from 1960 to 2018 indicate that world shocks that affect commodity prices and the world interest rate explain more than half of the variance of output growth on average across countries. However, the majority of this contribution, more than two thirds, stems from stationary world shocks. These results suggest that world disturbances that are responsible for low frequency movements in commodity prices play an important but not dominant role in driving fluctuations in aggregate activity at the country level.

Suggested Citation

  • Andrés Fernández & Stephanie Schmitt-Grohé & Martin Uribe, 2020. "Does the Commodity Super Cycle Matter?," Working Papers Central Bank of Chile 884, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:884
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    References listed on IDEAS

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    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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