The Macroeconomic Determinants of Commodity Prices

Carmen Reinhart and Eduardo Borensztein

MPRA Paper from University Library of Munich, Germany

Abstract: The "traditional structural approach" to determining real commodity prices has relied exclusively on demand factors as the fundamentals that explain commodity prices. This framework, however, has been unable to explain the sustained weakness in commodity prices in the 1980s and 1990s. This paper extends that framework in two important directions: first, it incorporates commodity supply in the analysis, capturing the impact on prices of the sharp increase in exports of developing countries during the debt crisis of the 1980s. Second, it takes a broader view of "world" demand that extends beyond the industrial countries and includes output developments in Eastern Europe and the Former Soviet Union. The empirical results support these extensions, as both the fit of the model improves substantially and, more important, its ability to forecast increases markedly.

Keywords: world commodity prices; output; real exchange rate (search for similar items in EconPapers)
JEL-codes: E3 F3 (search for similar items in EconPapers)
Date: 1994-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (135)

Published in IMF Staff Papers 2.41(1994): pp. 236-261

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/6979/1/MPRA_paper_6979.pdf original version (application/pdf)

Related works:
Journal Article: The Macroeconomic Determinants of Commodity Prices (1994)
Working Paper: The Macroeconomic Determinants of Commodity Prices (1994)
Working Paper: The determinants of commodity prices (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:6979

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().