Working Paper: NBER ID: w18874
Authors: David S. Jacks
Abstract: This paper considers the evidence on real commodity prices from 1900 to 2015 for 40 commodities, representing 8.72 trillion US dollars of production in 2011. In so doing, it suggests and documents a comprehensive typology of real commodity prices, comprising long-run trends, medium-run cycles, and short-run boom/bust episodes. The main findings can be summarized as follows: (1) real commodity prices have been on the rise—albeit modestly—from 1950; (2) there is a pattern—in both past and present—of commodity price cycles, entailing large and long-lived deviations from underlying trends; (3) these commodity price cycles are themselves punctuated by boom/bust episodes which are historically pervasive.
Keywords: Commodity Prices; Economic History; Price Cycles
JEL Codes: E3; N7; Q30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Real commodity prices have been on a modest rise since 1950 (Q02) | Long-run upward trend influenced by historical economic activities and production values (N13) |
| Commodity price cycles entail long-lived deviations from underlying trends (E32) | Demand-driven episodes linked to industrialization and urbanization (N91) |
| Real commodity prices can remain above trend for extended periods (Q31) | Reverting back due to countervailing supply responses (D43) |
| Characterization of boom-bust episodes in real commodity prices (E32) | Historically pervasive phenomena affecting commodity-exporting nations (F69) |
| Boom-bust episodes are identified based on deviations from established long-run trend and medium-run cycle (E32) | Specific thresholds defined for categorization (C24) |