Commodity Price Booms and Breaks: Detection, Magnitude and Implications for Developing Countries

Rodrigo Mariscal and Andrew Powell

No IDB-WP-444, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: There has been much interest of late regarding the current commodity “super cycle”. However, even sizing the current boom implies knowledge of long-run trends that are notoriously difficult to estimate. This paper uses new techniques to identify breaks in commodity prices and estimate trends and cointegrating relationships and argues that the weight of evidence is against a stable declining commodity terms of trade. The results are used to characterize the current boom and, assuming no new break, how commodity prices would be expected to return to the estimated “equilibrium”. The paper also discusses implications for commodity-dependent developing countries.

JEL-codes: C32 C52 Q02 Q33 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-agr and nep-opm
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Citations: View citations in EconPapers (10)

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