Commodity Prices: Cyclical Weakness or Secular Decline?

January 1, 1994

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Format: Chicago

Peter Wickham, and Carmen Reinhart. Commodity Prices: Cyclical Weakness or Secular Decline?, (USA: International Monetary Fund, 1994) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Primary commodities still account for the bulk of exports in many developing countries. However, real commodity prices have been declining almost continuously since the early 1980s and there is evidence of renewed weakness. The appropriate policy response to a terms of trade shock depends importantly on whether the shock is perceived to be temporary or permanent. Our results indicate that the recent weakness in commodity prices is mostly of a secular nature, stressing the need for commodity exporting countries to concentrate on export diversification and other structural policies. There is, however, scope for stabilization funds and the use of hedging strategies since the evidence also suggests commodity prices have become more volatile.

Subject: Agricultural commodities, Commodities, Commodity price fluctuations, Commodity prices, Metals, Prices

Keywords: Africa, Agricultural commodities, Commodity index, Commodity option, Commodity price, Commodity price behavior, Commodity price fluctuations, Commodity price index, Commodity prices, Commodity producer, Commodity risk, Commodity supply index, Export commodity, Metals, Price decline, Price shock, Stabilization fund, Support commodity agreement, WP

Publication Details

Pages:

58
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/007
Stock No:

WPIEA0071994
ISBN:

9781451842371
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 41, No. 2, June 1994.

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