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Price Convergence on World Commodity Markets: Fact or Fiction?

Author

Listed:
  • James O. Bukenya

    (Department of Agribusiness, Alabama A&M University, Normal, ALjames.bukenya@email.aamu.edu)

  • Walter C. Labys

    (Regional Research Institute, West Virginia University, Morgantown, WVwlabys@wvu.edu)

Abstract

This article examines the degree to which commodity prices have converged on world commodity markets over recent decades. Ideally, increases in communications, central bank activities, and globalization would suggest that commodity prices in spatially dispersed markets should become similar over time. To measure convergence, correlation, regression, cointegration, and vector autoregressive methods are employed. Comparable geographic data were assembled for six commodities: coffee, cotton, wheat, lead, copper, and tin, covering the period 1930 through 1998. Overall, the empirical results do not support the convergence hypothesis but rather a pattern of fluctuating divergences.

Suggested Citation

  • James O. Bukenya & Walter C. Labys, 2005. "Price Convergence on World Commodity Markets: Fact or Fiction?," International Regional Science Review, , vol. 28(3), pages 302-329, July.
    • Handle: RePEc:sae:inrsre:v:28:y:2005:i:3:p:302-329
    DOI: 10.1177/0160017604267638
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    1. Degye Goshu, 2016. "The Dynamics of Food Price Convergence in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 24(1), April.
    2. Barbaglia, Luca & Wilms, Ines & Croux, Christophe, 2016. "Commodity dynamics: A sparse multi-class approach," Energy Economics, Elsevier, vol. 60(C), pages 62-72.
    3. Jamora, Nelissa & Cramon-Taubadel, Stephan von, 2012. "What world price?," GlobalFood Discussion Papers 142241, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Zoltán Bakucs & Štefan Bojnec & Imre Fertő, 2015. "Spatial Product Market Integration between Two Small, Open Neighbouring Economies," Agribusiness, John Wiley & Sons, Ltd., vol. 31(2), pages 171-187, April.
    5. Kateryna Goychuk & William H. Meyers, 2014. "Black Sea and World Wheat Market Price Integration Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 245-261, June.

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