Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68115
Authors: 
Varella Mollick, André
Faria, João Ricardo
Albuquerque, Pedro H.
León-Ledesma, Miguel A.
Year of Publication: 
2005
Series/Report no.: 
Department of Economics Discussion Paper, University of Kent 05,10
Abstract: 
Several empirical studies report the existence of declining terms of trade between commodities and manufactures, supporting the Prebisch-Singer hypothesis. As globalization leads to greater integration of markets, we ask if in a fully integrated economy the terms of trade will display the same negative trend. Assuming that globalization would make the world economy behave as the US economy, this paper shows that the US internal real commodities' terms of trade over the 1947-1998 period experienced slowly declining but significant trends. We then test if common factors may be driving the US and international terms of trade in the long-run. The results suggest that both series, particularly those using crude materials in the numerator, share a positive long-run relationship. It follows that international integration plays no role in causing the decreasing trend of the terms of trade.
Subjects: 
Economic Integration
Globalisation
Prebisch-Singer
JEL: 
E31
F15
F41
Document Type: 
Working Paper

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