drift in the relative price of primary commodities a case where we care about unit roots the evidence for the prebisch singer hypothesis of a downward drift over time in the relative price of primary commodities is considered the apparent strength of that evidence appears to depend to a substantial degree on whether the time series of relative prices is assumed to be trend stationary or integrated of order one moreover the usual econometric tests are relatively uninformative on this question these conclusions emerge whether or not a structural break in the series is permitted

re testing prebisch singer hypothesis new evidence using fourier quantile unit root test the prebisch singer hypothesis in economics asserts that over time the relative price of primary goods relative to manufactured goods should experience a downward trend to test the hypothesis we

from the classical economists to empiricists a review of the terms of trade controversy contrary to the classical position the works of prebisch and singer in the middle of the last century launched the controversial hypothesis of a long term decline in the terms of trade of primary products vis a vis manufactured goods and a corresponding decline in the terms of trade of developing countries vis a vis advanced ones the present study traces the origin and evolution of the hypothesis and reviews the related statistical debate it also reviews the theoretical support for the prebisch singer hypothesis it is an exercise in the history of economic thought to trace how the controversies surrounding the terms of trade have evolved over time specifically noting that with the development of the field of econometrics the central thesis of the argument got lost somewhere in the realm of hi tech statistical debates

noncausality and the commodity currency hypothesis abstract this paper provides new evidence on the role of exchange rates in forecasting commodity prices consistent with previous studies we find that commodity currencies hold out of sample predictive power for commodity prices when using standard linear predictive regressions after we reconsider the evidence using noncausal autoregressions which provide a better fit to the data and are able to accommodate the effects of nonlinearities and omitted variables the predictive power of exchange rates disappears

on the prevalence of trends in primary commodity prices abstract this paper applies new time series procedures to examine the prebisch singer hypothesis of a secular deterioration in relative primary commodity prices specifically we allow for up to two structural breaks in 24 price series covering the 1900 98 period for the majority of commodities it is shown that the trend is not well represented by a single downward slope but instead by a shifting trend that often changes sign over the sample period unlike some recent work that has also allowed for structural breaks these results provide much less support for the prebisch singer hypothesis

have food and financial markets integrated this article analyses comovements and discusses possibly greater market integration between aggregate food commodity and stock prices in the period 1990 to 2012 return correlations price return distributions cointegration and granger causalities are tested in subsamples on monthly fao food price index and msci world stock market index empirical results suggest that while there is only weak indication of greater comovements concurrent with structural changes such as changed agricultural policies new demand due to growth in emerging markets and energy mandates and the financialization of food markets since the early 2000s they did start to increase substantially in particular during the financial stress of the lehman crisis and the great recession while structural changes may have amplified price linkages across markets results do not suggest that they are the key factors for greater price comovements instead the effects of the late 2000s recession as a time of great economic weakness and uncertai

trends cycles and asymmetries in the terms of trade of primary commodities from developed and less developed countries abstract the paper examines the prebisch hypothesis that primary product prices relative to the price of manufacturers fall during cyclical downturns by more than they rise during cyclical upturns and that this is an independent explanation of the secular tendency of the net barter terms of trade to move against primary commodities an important distinction is made between primary products exported by less developed countries and those exported by developed countries the greater cyclicality of primary product prices and the long run deterioration in their terms of trade since 1954 are confirmed but there is little support for the prebisch thesis that primary product prices relative to manufacturers are move sensitive on the downswing than the upswing

primary commodity prices co movements common factors and fundamentals the behavior of commodities is critical for developing and developed countries alike this paper contributes to the empirical evidence on the co movement and determinants of commodity prices using nonstationary panel methods we document a statistically significant degree of co movement due to a common factor within a factor augmented var approach real interest rate and uncertainty as postulated by a simple asset pricing model are both found to be negatively related to this common factor this evidence is robust to the inclusion of demand and supply shocks which both positively impact on the co movement of commodity prices

the commodity terms of trade unit roots and nonlinear alternatives a smooth transition approach market price dynamics for north american oriented strand board markets are examined specifically the role of transactions costs are examined vis a vis the law of one price weekly data for the january 3rd 1995 through april 14th 2006 period are used in the analysis nonlinearities induced by unobservable transactions costs are modeled by estimating smooth transition autoregressions stars results indicate that nonlinearity is an important feature of these markets and that the parity relationships implied by economic theory are generally supported by the star models implications for the efficiency of spatial market linkages are examined by estimating generalized impulse response functions

unit roots flexible trends and the prebisch singer hypothesis abstract this paper studies the dynamic properties of relative commodity prices especially the prebisch singer hypothesis on their secular decline using a new family of unit root tests based on the fourier approximation to the data s underlying trend the approximation controls for low frequency variations such as structural breaks or the long swings induced by hypothesized super cycles in the data regarding the extant literature we find considerably more evidence against nonstationarity in relative commodity prices and very limited support for the prebisch singer hypothesis

testing for trends in the terms of trade between primary commodities and manufactured goods abstract this paper joins the statistical debate on the terms of trade between primary commodities and manufactured goods by contributing to the methodological discussion and presenting new evidence using data series covering almost the whole of the 20th century using statistical tests that take into account breaks in the series it is found that over the 20th century the relative prices of primary commodities dropped to nearly one third of their level at the beginning of the century in two installments when random shocks led to structural breaks and not in a gradual way as implied by either a deterministic or stochastic trend possible reasons for the structural breaks and their policy implications are discussed

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

foreign direct investment access to finance and innovation activity in chinese enterprises a recent comprehensive database is used to investigate the link between inward foreign direct investment fdi and innovation activity in china the results of the analysis suggest that private and collectively owned firms with foreign capital participation and those with good access to domestic bank loans innovate more than other firms do among enterprises not owned by the state inward fdi at the sectoral level is positively associated with domestic innovative activity only among firms that engage in their own research and development or that have good access to domestic finance at the sector level the effect of inward fdi into technology transfer is distinguished from the effect on domestic credit opportunities fdi affecting credit is of little significance for state owned enterprises and is independent of their access to finance in contrast better access to credit is an important channel through which fdi affects the innovation of domestic private and collectively owned enterprises

commodity and developing country terms of trade what does the long run show recently the debate surrounding the commodity net barter terms of trade and the terms of trade of developing countries has entered a new phase in this journal spraos i980 presents evidence of a stable declining commodity terms of trade and sapsford i985 although fl nding instability in the work of spraos argues in support of the stable declining terms of trade hypothesis grilli and yang i988 henceforth gy also provide evidence supporting this view and state the implications of this finding for developing country terms of trade a major contribution of gy is a published set of data on the main price indices with a high degree of consistency for the whole century 1 however cuddington and urzua i989 in thisjournal illustrate that the hypothesis of a secular deterioration in the commodity terms of trade is not robust to the alternative claim that there was a once and for all shift in commodity prices in the period i920 i after taking this shift into account these authors find little evidence to support the view of a secular decline 2 this debate has important implications for the prebisch singer hypothesis of a stable declining commodity terms of trade see for instance prebisch i 950 it also has implications for both development and stabilisation strategies adopted by commodity dependent developing countries a central issue in this analysis is the order of integration of the commodity terms of trade a time series is said to be integrated of order o i o if its mean and variance are constant or roughly speaking if the series is stationary a time series is said to be i n if the series requires first differencing n times before a stationary series is obtained alternatively if adding a time trend is sufficient to induce stationarity the series is termed trend stationary a trend stationary series implies that the variable in question simply adjusts around a constant growth path but an i i series is truly non stationary and displays very different properties a commonly cited example of an 1 i series is the random walk the order of integration of a single time series is related to the idea of cointegration of a number of time series consider two variables x and y that are not themselves i o but are of the same order of integration if the residuals from regressing x on y or vice versa are i o or roughly speaking if the residuals are stationary it can be concluded that the two variables are cointegrated in turn this implies that there is some form of equilibrium

long run trends in 26 primary commodity prices abstract this paper uses time series techniques to re examine the prebisch singer hypothesis that there has been a secular deterioration in primary commodity prices in terms of manufactured goods instead of using price indices it considers 26 individual commodity prices over the period 1900 1983 this avoids possible aggregation and interpretation problems associated with the use of aggregate indices the study finds that 16 of the 26 prices are trendless five have statistically significant negative trends the remaining five have positive trends it concludes that the prebisch singer hypothesis should certainly not be considered a universal phenomenon or stylized fact

commodity prices how important are real and nominal shocks we consider the response of both nominal and real commodity prices on world markets to real and nominal shocks by hypothesizing that nominal shocks can permanently affect nominal commodity prices but can have only temporary effects on real commodity prices real shocks in contrast can have permanent as well as temporary effects on both nominal and real commodity prices when nominal and real shocks are decomposed in this manner real shocks are found to be of much greater importance to the observed movements in commodity prices we use the blanchard and quah bq 1989 decomposition to obtain the permanent and temporary components of the real commodity price series and relate this to the rate of growth of world industrial production as an indicator of business cycle movements the results suggest that the impact of the business cycle is self stabilizing in that there is an initial positive effect on growth in commodity prices followed by a fully offsetting negative effect

industrial groupings and foreign direct investment we explore worldwide foreign direct investment location decisions by japanese manufacturing firms from 1985 through 1991 our conditional logit estimates provide evidence that firms location decisions are affected by membership in either vertical or horizontal keiretsu consistent with previous studies that stress agglomeration effects on firms location decisions we find that the stock of investment in a region by a firm s vertical keiretsu partners increases the probability of location further we find that the recent flow of investment into a region by a firm s horizontal keiretsu partners increases the probability of investment to the region providing evidence of networking effects

a reexamination of trends in primary commodity prices this paper conducts a reexamination of the prebisch singer hypothesis by employing the unit root test proposed by lee and strazicich 2003 and lee and strazicich 2004 that allow for up to two structural breaks given the higher power of these tests compared to the zivot and andrews 1992 and lumsdaine and papell 1997 tests rejection of the null can be considered as genuine evidence of stationarity the main findings of this paper are that eleven out of twenty four commodity prices are found to be difference stationary implying that shocks to these commodities tend to be permanent in nature the remaining thirteen prices are found to exhibit trend stationary behavior with either one or two structural breaks most of the commodities that do not exhibit difference stationary behavior seem to contain no significant trends there are fewer cases in relation to past studies of commodities that display negative trends thereby weakening the case for the prebisch singer hypothesis

agglomeration economies and location choice of korean manufacturers within the united states employing the micro data for 1997 2004 we investigate the location decision of korean affiliated manufacturing investments in the united states the conditional logit estimates confirm that although industry specific korean agglomeration and domestic agglomeration play an important role the foreign direct investment fdi location is more sensitively affected by the interstate difference in endowment conditions than by the same nationality agglomeration both business service and intermediate good agglomeration are main determinants of fdi location furthermore estimation results show substantial change in the location pattern after recovery from the asian financial crisis we find quite different patterns of location decision across industry groups dispersion forces work greater than the agglomeration force in the consumer goods industry forward linkages with us upstream firms can be seen in the assembly and processing industry and typical follow the leader pattern mixed with market potential effec

trends and cycles in the net barter terms of trade a new approach this study has two objectives first it uses time series techniques including unit root tests to reexamine the classic prebisch singer hypothesis that the relative prices of primary commodities in terms of manufactured goods are characterized by secular deterioration second commodity price movements are decomposed into permanent and cyclical components using the beveridge and nelson 1981 technique the latter information is valuable when assessing the viability of commodity stabilization funds and formulating countercyclical macroeconomic policy responses to commodity booms and busts copyright 1989 by royal economic society

biofuel related price transmission literature a review abstract in this article an extensive review of the rapidly growing biofuel related time series literature is carried out the data used the modeling techniques and the main findings of this literature are discussed providing a review of this flourishing research area is relevant as a guidepost for future research this literature concludes that energy prices drive long run agricultural price levels and that instability in energy markets is transferred to food markets

sharp breaks or smooth shifts an investigation of the evolution of primary commodity prices this paper explores the behavior of real commodity prices over a 50 year period attention is given to how the shifting means for various commodity prices have changed with a special emphasis on behavior since the mid 2000s to identify structural changes in commodity prices we estimate shifting mean autoregressions by using the bai and perron 1998 procedure for determining structural breaks low frequency fourier functions and a procedure that specifies shifts to be smooth logistic functions of time we find that the pattern in the timing of shifts is suggestive of the causal factors underlying the recent boom

the prebisch singer hypothesis four centuries of evidence we employ a unique data set and new time series techniques to reexamine the existence of trends in relative primary commodity prices the data set comprises 25 commodities and provides a new historical perspective spanning the seventeenth to the twenty first centuries new tests for the trend function robust to the order of integration of the series are applied to the data results show that eleven price series present a significant and downward trend over all or some fraction of the sample period in the very long run a secular deteriorating trend is a relevant phenomenon for a significant proportion of primary commodities 2010 the president and fellows of harvard college and the massachusetts institute of technology

recent trends in the terms of trade of jamaica 1955 86 the prebisch singer hypothesis of a long term deterioration in the commodity terms of trade of developing countries has evoked tremendous controversy in the literature most of the empirical work on the terms of trade is devoted to all developing countries this paper is country specific modern time series techniques have been used to test the perbisch singer hypothesis the empirical results for jamaica support the declining terms of trade hypothesis unit root tests indicate that jamaica s terms of trade is trend stationary finally the empirical evidence suggests that the decline in the terms of trade accounted for an annual loss of approximately 1 5 percent in jamaica s gdp

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

some estimates of prebisch and singer effects on the terms of trade between primary producers and manufacturers abstract movements in the prices of primary products and manufactured goods are analyzed using a model based on the seminal contributions of raul prebisch and hans singer estimates are obtained from a system of equations using post wwii data on prices wages and manufacturing mark ups with the results providing evidence of the negative effects on the terms of trade of primary producers suggested by both prebisch and singer these effects more than offset positive effects arising from diminishing returns in primary production thereby providing an explanation for the negative net trend in the terms of trade of primary producers in the postwar period

testing the prebisch singer hypothesis since 1650 evidence from panel techniques that allow for multiple breaks abstract in this paper we re examine two important aspects of the dynamics of relative primary commodity prices namely the secular trend and the short run volatility to do so we employ 25 series some of them starting as far back as 1650 and powerful panel data stationarity tests that allow for endogenous multiple structural breaks results show that all the series are stationary after allowing for endogenous multiple breaks test results on the prebisch singer hypothesis which states that relative commodity prices follow a downward secular trend are mixed but with a majority of series showing negative trends we also make a first attempt at identifying the potential drivers of the structural breaks we end by investigating the dynamics of the volatility of the 25 relative primary commodity prices also allowing for endogenous multiple breaks we describe the often time varying volatility in commodity prices and show that it has increased in recent years

are output fluctuations transitory according to the conventional view of the business cycle fluctuations in output represent temporary deviations from trend the purpose of this paper is to question this conventional view if fluctuations in output are dominated by temporary deviations from the natural rate of output then an unexpected change in output today should not substantially change one s forecast of output in say five or ten years our examination of quarterly postwar united states data leads us to be skeptical about this implication the data suggest that an unexpected change in real gnp of 1 percent should change one s forecast by over 1 percent over a long horizon

can globalisation stop the decline in commodities terms of trade in this paper we address the following question would a fully integrated world economy eliminate the widely reported decline in the terms of trade of primary commodities we address the question by looking at the terms of trade within the us a highly integrated economy our findings show two results first us internal real commodities terms of trade over the 1947 1998 period experienced slowly declining but significant trends second once we control for the effect of us prices on international terms of trade we find a long run relationship between the us and international relative prices these findings support the view that the decline of commodities terms of trade bears no relationship with the process of globalisation this seems to indicate that if world terms of trade behaved as the us terms of trade neither increased integration nor protectionist measures would eliminate this trend

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

searching for a break in gnp it has been suggested that existing estimates of the long run impact of a surprise move in income may have a substantial upward bias due to the presence of a trend break in postwar u s gross national product data this article shows that the statistical evidence does not warrant abandoning the no trend break null hypothesis a key part of the argument is that conventionally computed p values overstate the likelihood of the trend break alternative hypothesis this is because they do not take into account that in practice the date is chosen based on pretest examination of the data

long run commodity prices economic growth and interest rates 17th century to the present day a significant proportion of the trade basket of many developing countries is comprised of primary commodities this implies relative price movements in commodities may have important consequences for economic growth and poverty reduction taking a long run perspective we examine the historical relation between a new aggregate index of commodity prices economic activity and interest rates initial empirical tests show that commodity prices present a downward trend with breaks over the entire industrial age providing clear support for the prebisch singer hypothesis it would also appear that this trend has declined at a faster rate since the 1870s conversely several gdp series such as world chile china uk and us trend upwards with breaks such trending behaviour in both commodity prices and economic activity suggests a latent common factor like technological innovation to assess the relationships between economic series we apply a stationary var vector autoregression to model movements around trends strikingly there is evidence that commodity prices granger cause income and interest rates whilst interest rates granger cause commodity prices from these results and the related impulse response function analysis the historical perspective provides some useful information for contemporary policy makers for example loose monetary policy has tended to support higher commodity prices more over commodity price movements have an asymmetric country effect on economic activity periods of falling commodity prices will support gdp growth for com modity importers like the us but depress growth for commodity exporters such as chile

commodity prices and unit root tests price theory suggests that commodity prices should be stationary series yet tests for unit roots rather frequently imply that these prices are not stationary this seeming inconsistency is investigated by applying alternative specifications of unit root tests to prices of corn soybeans barrows and gilts and milk the preponderance of evidence suggests that nominal prices do not have unit roots but the results are sensitive to the specification of the test equation accounting for a structural change that shifts the mean appears to be an important issue in unit root tests

the narrow moving band the dutch disease and the competitive consequences of mrs thatcher notes on trade in the presence of dynamic scale economies abstract this paper presents a model of trade in which comparative advantage instead of being determined by underlying attributes of countries evolves over time through learning by doing in this model arbitrary patterns of specialization once established tend to become entrenched over time the model sheds light on three widely held views that do not make sense in more conventional models first is the view that temporary protection of selected sectors can permanently alter the pattern of comparative advantage in the protecting country s favor second is the view that seemingly favorable developments such as the discovery of exportable natural resources may lead to a permanent loss of other sectors and reduce welfare in the long run third is the possibility that a temporary overvaluation of a currency due to tight money can lead to a permanent loss of competitiveness in some sectors

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

trends in world energy prices the correct identification of the time series path of non renewable energy resources has far reaching consequences for economists and policymakers alike this study builds on the existing literature by employing a data series that includes a sample period of institutional change and recently developed unit root testing procedures besides crude oil natural gas and coal prices are also examined aiming to further the knowledge of non renewable energy resource time paths in order to inform future research and update the conclusions of past studies the unit root tests allow for structural breaks and are based on the procedures developed by zivot and andrews 1992 lumsdaine and papell 1997 and lee and strazicich 2003 finally we investigate whether the trend changes signs in the regimes which are bounded by the structural breaks and quantify the prevalence of the trends over the sample period considered the results show that the trend is not well represented by a single positive or negative trend the variability of the trend suggests that forecasting energy prices should not typically occur about a single trend

estimating the competitive storage model with trending commodity prices we present a method to estimate jointly the parameters of a standard commodity storage model and the parameters characterizing the trend in commodity prices this procedure allows the influence of a possible trend to be removed without restricting the model specification and allows model and trend selection based on statistical criteria the trend is modeled deterministically using linear or cubic spline functions of time the results show that storage models with trend are always preferred to models without trend they yield more plausible estimates of the structural parameters with storage costs and demand elasticities that are more consistent with the literature they imply occasional stockouts whereas without trend the estimated models predict no stockouts over the sample period for most commodities moreover accounting for a trend in the estimation imply price moments closer to those observed in commodity prices our results support the empirical relevance of the speculative storage model and show that storage model estimations should not neglect the possibility of long run price trends

dynamic persistence of primary commodity prices this article examines the persistence of shocks to international commodity prices from 1900 to 2008 using the updated grilli yang index the main innovation of this study is that it determines whether commodity prices are characterized by multiple changes in persistence specifically bootstrap methods are used to estimate persistence and the associated half life shocks are calculated we find that the persistence of shocks can vary widely depending on the individual commodity and the time period the results suggest that policy makers need to exercise caution when introducing measures to cushion the effect of shocks to world commodity prices

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

an analysis of multiple structural breaks in us relative farm prices the movement of farm prices relative to other commodity prices is analysed for the period 1913 01 to 2003 12 investigating the number and time of structural breaks and discussing likely causes of structural breaks in the relative farm prices bai and perron s 1998 2003 multiple structural change test with a dynamic programming algorithm is used this test makes it possible to have an efficient computation of the estimates of the break points as global minimizers of the sum of squared residuals we find six structural breaks when we consider only the mean process and two breaks when we consider the mean and autoregressive processes possible causes for these breaks are discussed

when grilli and yang meet prebisch and singer piecewise linear trends in primary commodity prices abstract in this study we test the prebisch singer hypothesis on the secular decline of relative primary commodity prices with the extended grilli and yang 1988 data set ending at 2010 rather than asking whether it holds for the whole sample period we examine if the hypothesis holds sometimes during the sample period by estimating the piecewise linear trends of primary commodity prices we employ the new l1 trend filtering proposed by kim et al 2009 to estimate the piecewise linear trends we find that the prebisch singer hypothesis holds sometimes but not always for many of the primary commodities in the grilli yang data the strength of the prebisch singer hypothesis has become substantially weaker recently as the relative prices of many primary commodities have increased sharply since around 2000

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

the statistical debate on the net barter terms of trade between primary commodities and manufactures a comment and some additional evidence i950 p s hypothesis according to this hypothesis the net barter terms of trade nbtt between primary products and manufactures have over the longrun exhibited a downward trend spraos presented a detailed and thorough analysis of both the adequacy of the various statistical series available to proxy the nbtt s behaviour over the long run and the wide range of conceptual including quality problems involved in such an exercise on the basis of his analysis spraos concluded that the balance of the evidence for the seventy year period ending with the outbreak of world war ii supported the p s hypothesis of a secular deterioration in the nbtt it should however be noted that the evidence also suggested that the particular series cho sen for analysis by prebisch i950 himself did appear to exaggerate possibly to a large extent the rate of deterioration however when the analysis was extended to include the post world war ii period spraos found that while the deteriorating tendency cannot be decisively refuted it is open to doubt when the record up to the i970s is taken into account i980 p i26 as we shall see in this paper closer scrutiny reveals a statistical problem with spraos s analysis and the purpose of this paper is to show that once appropriate action is taken to overcome this problem some quite strong evidence in support of the p s hypothesis emerges the paper is organised as follows section i briefly discusses spraos s methodology and section ii discusses an econometric issue arising from this analysis section iii presents our empirical evidence while section iv summarises the main findings of the paper

what drives commodity prices this paper examines common forces driving the prices of 51 highly tradable commodities we demonstrate that highly persistent movements of these prices are mostly due to the first common component which is closely related to the us nominal exchange rate in particular our simple factor based model outperforms the random walk model in out of sample forecast for the us exchange rate the second common factor and de factored idiosyncratic components are consistent with stationarity implying short lived deviations from the equilibrium price dynamics in concert these results provide an intriguing resolution to the apparent inconsistency arising from stable markets with nonstationary prices

agglomeration backward and forward linkages evidence from south korean investment in china abstract with a firm level data set we study the location decision of south korean multinationals across china s regions our conditional logit estimates confirm agglomeration effects along industry and along national lines we add an upstream and downstream backward and forward linkage effect we find that the presence of upstream and downstream south korean affiliates significantly increases the likelihood that a south korean multinational invests in a particular region however linkages that do not differentiate by nationality do not seem to matter much as such our analysis of investors location choice brings together two perspectives linkages and agglomeration along national lines

does oil corrupt evidence from a natural experiment in west africa abstract this paper explores the oil discovery announcements in sao tome and principe 1997 1999 to assess the role of natural resources in determining corruption for this purpose we use a natural experiment framework which contrasts sao tome and principe to cape verde a control west african country sharing the same colonial past and important recent economic and political shocks our measurement is based on tailored household surveys we conducted in both island countries the unique survey instrument was retrospective and used personal histories to elicit memories from the respondents we analyze changes in perceived corruption across a wide range of public services and allocations we find clearest increases on vote buying education namely in the allocation of scholarships and customs ranging from 31 to 40 of the subjective scale we interpret these findings as symptoms of increased competition for core state resources

the prebisch singer hypothesis a reappraisal independent of stationarity hypotheses time series behaviour of the relative price of primary commodities raul prebisch i950 and hans singer i950 believed that the long term trend of primary commodity prices was negative the latter in an interesting discussion of the above quandary pp 482 3 viewed rises in primary commodity prices as purely temporary sources of surplus that offered short lived opportunities to increase industrial investment these opportunities were missed by private investors who instead increased primary sector investment in such circumstances because all private activity tends to be governed by the price