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The long-run behaviour of the terms of trade between primary commodities and manufactures: A panel data approach

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  • Iregui, Ana María
  • Otero, Jesús
Abstract
This paper examines the Prebisch and Singer hypothesis using a panel of twenty-four commodity prices from 1900 to 2010. The modelling approach stems from the need to meet two key concerns: i.) the presence of cross-sectional dependence among commodity prices; and ii.) the identification of potential structural breaks. To address these concerns, the Hadri and Rao (2008) test is employed. The findings suggest that all commodity prices exhibit a structural break whose location differs across series, and that support for the Prebisch and Singer hypothesis is mixed. Once the breaks are removed from the underlying series, the persistence of commodity price shocks is shorter than that obtained in other studies using alternative methodologies.

Suggested Citation

  • Iregui, Ana María & Otero, Jesús, 2013. "The long-run behaviour of the terms of trade between primary commodities and manufactures: A panel data approach," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158682, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc13:158682
    DOI: 10.22004/ag.econ.158682
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    7. Farrukh Bashir & Fareeha Andleeb & Rahat Fatima, 2016. "Intra Industry Trade, Fiscal Policy And Terms Of Trade Of Pakistan: A Long Run Analysis Using Ardl Technique," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 4(1), pages :1-16, December.

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    Keywords

    Demand and Price Analysis; Environmental Economics and Policy;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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