Can globalisation stop the decline in commodities' terms of trade?Andre Varella Mollick (), Joao Ricardo Faria (), Pedro H. Albuquerque () and Miguel Leon-Ledesma () Cambridge Journal of Economics, 2008, vol. 32, issue 5, pages 683-701 Abstract: 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. Copyright The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press. Date: 2008 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:oup:cambje:v:32:y:2008:i:5:p:683-701 Ordering information: This journal article can be ordered from Access Statistics for this article Cambridge Journal of Economics is edited by Katharine Norman More articles in Cambridge Journal of Economics from Oxford University Press |
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