What moves commodity terms-of-trade? Evidence from 178 countries

Yousef Makhlouf, Neil M. Kellard and Dmitri Vinogradov

Journal of Commodity Markets, 2023, vol. 32, issue C

Abstract: Despite the important impact of commodity terms-of-trade (CTOT) on GDP growth, child mortality rates and public debt, little is known about its determinants. Using data from 178 countries (grouped according to their commodity export-import structure) over the period 1962 to 2020, we examine the short-and long-run effects of global economic activity, OECD and emerging markets growth, the exchange rate of U.S. dollar, stock price volatility and real interest rates on CTOT growth. We demonstrate their typical asymmetric effect on exporters and importers, and show, for example, that the exchange rate of the U.S. dollar also exhibits opposite effects over the short and long run due to inelastic commodity demand. We find that the growth of emerging market economies provides the most universal and consistent effect across all of our subsamples (i.e., energy and non-energy exporters and importers) - this latter point underscores the contemporary global importance of developing countries' growth.

Keywords: Commodity terms-of-trade; Macro-determinants; Developing countries (search for similar items in EconPapers)
JEL-codes: F62 O13 Q02 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:32:y:2023:i:c:s2405851323000491

DOI: 10.1016/j.jcomm.2023.100359

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