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

Working Paper #263

Bilge Erten, José Antonio Ocampo

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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-tern upward trend, which was only interrupted temporarily during some four decades of the twentieth century.

About the Authors

Bilge Erten
Postdoctoral Research Scholar
Committee on Global Thought
Columbia University

Bilge Erten is a Postdoctoral Research Scholar at Committee on Global Thought, Columbia University. She completed her Ph.D. in Economics from the University of Massachusetts Amherst in 2010. Her current research focuses on the use of macroprudential and capital account policies by developing countries to manage foreign exchange pressure, improve monetary policy autonomy, and enhance crisis resilience and post-crisis overheating in a counter-cyclical way. In particular, her research analyzes the macroeconomic effectiveness of capital account regulations including capital inflow/outflow restrictions, foreign exchange related prudential measures, and financial sector specific regulations on international borrowing.

José Antonio Ocampo
Co-President
Initiative for Policy Dialogue (IPD)

Jose Antonio Ocampo is Co-President of IPD, Professor of Professional Practice in the School of International and Public Affairs, and Fellow of the Committee on Global Thought at Columbia University. Prior to his appointment at Columbia, Professor Ocampo served as the United Nations Under-Secretary-General for Economic and Social Affairs, and head of UN Department of Economic and Social Affairs (DESA), as Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), and has held a number of high-level posts in the Government of Colombia, including Minister of Finance and Public Credit, Director of the National Planning Department, and Minister of Agriculture . Professor Ocampo is author or editor of over 30 books and has published over 200 scholarly articles on macroeconomic theory and policy, international financial issues, economic development, international trade, and Colombian and Latin American economic history.

Publication Information

Type Working Papers
Program Trade
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Posted 01/05/12