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Can Globalisation Stop the Decline in Commodities' Terms of Trade?

Listed author(s):
  • André Mollick

    (CoBA - College of Business Administration - University of Texas-Pan American)

  • João Faria

    (MPA - Master in Public Administration - University of Texas at El Paso)

  • Pedro Albuquerque

    ()

    (Euromed Marseille - École de management - Association Euromed Management - Marseille, DEFI - Centre de recherche en développement économique et finance internationale - Université de la Méditerranée - Aix-Marseille 2 - Faculté des Sciences Economiques)

  • Miguel León-Ledesma

    (School of Economics - University of Kent)

In this paper we address the following question: would a fully integrated world economy eliminate the widely reported decline in the terms of trade of primary commodities? We address the question by looking at the terms of trade within the US (a highly integrated economy). Our findings show two results. First, US internal real commodities' terms of trade over the 1947-1998 period experienced slowly declining but significant trends. Second, once we control for the effect of US prices on international terms of trade, we find a long-run relationship between the US and international relative prices. These findings support the view that the decline of commodities' terms of trade bears no relationship with the process of globalisation. This seems to indicate that, if world terms of trade behaved as the US terms of trade, neither increased integration nor protectionist measures would eliminate this trend.

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Paper provided by HAL in its series Post-Print with number halshs-00746269.

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Date of creation: 19 Jan 2008
Publication status: Published in Cambridge Journal of Economics, Oxford University Press (OUP), 2008, 32 (5), pp.683-701. <10.1093/cje/bem054>
Handle: RePEc:hal:journl:halshs-00746269
DOI: 10.1093/cje/bem054
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00746269
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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