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Super-Cycles of Commodity Prices Since the Mid-Nineteenth Century

Bilge Erten; Jose A. Ocampo

Title:
Super-Cycles of Commodity Prices Since the Mid-Nineteenth Century
Author(s):
Erten, Bilge
Ocampo, Jose A.
Date:
Type:
Working papers
Department:
Initiative for Policy Dialogue
Permanent URL:
Series:
Initiative for Policy Dialogue Working Paper Series
Abstract:
The decomposition of real commodity prices using the BP filtering technique provides evidence of four super-cycles over 1865 to 2009 ranging between 30 to 40 years and with amplitudes of 20 to 40 percent higher or lower than the long-run trend. Non-oil price super-cycles follow those of world GDP, indicating that they are essentially demand-determined. In contrast, causality runs in the opposite direction for oil prices. In turn, the mean of each super-cycle of non-oil commodities is generally lower than that of the previous cycle suggesting a step-wise deterioration in support of the Prebisch-Singer hypothesis. Tropical agriculture experienced the strongest and steepest long-term downward trend through the twentieth century, followed by non-tropical agriculture and metals. Again, in contrast to these trends, real oil prices have experienced a long-term upward trend, which was only interrupted temporarily during some four decades of the twentieth century.
Subject(s):
Economic history
Item views:
269
Metadata:
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