Long Run Prices of Primary Commodities and Oil Prices
نویسنده
چکیده
Acute volatile movements in primary commodity prices have drawn enough interests from empirical researchers. Exports of these commodities account for the bulk of export earnings of developing countries. The traditional demand based framework has been unable to explain the marked deterioration in these prices during 1980s. This paper tries to ascertain the role played by real oil prices in explaining the extreme volatile movements in real prices of primary commodity by taking into account oil price shocks over the period 1973-1996, using monthly data. Real primary commodity prices and real oil prices are cointegrated. Additionally, the error in the cointegrating relation stimulates real commodity price adjustment, not real oil price adjustment. JEL classification: F39; E30 .
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