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African terms of trade and the commodity terms of trade: close cousins or distant relatives?

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  • Paul Cashin
  • Catherine Pattillo

Abstract

This paper examines whether there is a relationship between the commodity terms of trade (the price of primary commodities relative to the price of manufactures) and the net barter terms of trade of 42 Sub-Saharan African countries. For most countries, there is little evidence of a stable, long-run relationship between the two terms of trade series. Accordingly, the practice in the literature of proxying for movements in any given country's terms of trade by using an aggregate index of relative commodity prices is inappropriate, and is likely to engender misleading policy conclusions.

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  • Paul Cashin & Catherine Pattillo, 2006. "African terms of trade and the commodity terms of trade: close cousins or distant relatives?," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 845-859.
    • Handle: RePEc:taf:applec:v:38:y:2006:i:8:p:845-859
    DOI: 10.1080/00036840600683244
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    Cited by:

    1. Thomas H.W. Ziesemer, 2014. "Country terms of trade: trends, unit roots, over-differencing, endogeneity, time dummies, and heterogeneity," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(6), pages 767-796, September.
    2. Nchofoung, Tii N., 2022. "Trade shocks and labour market resilience in Sub-Saharan Africa: Does the franc zone response differently?," International Economics, Elsevier, vol. 169(C), pages 161-174.
    3. Christopher Cramer & Jonathan Di John & John Sender, 2022. "Classification and Roundabout Production in High‐value Agriculture: A Fresh Approach to Industrialization," Development and Change, International Institute of Social Studies, vol. 53(3), pages 495-524, May.
    4. Kagiso Mangadi & Jeffrey Sheen, 2017. "Identifying terms of trade shocks in a developing country using a sign restrictions approach," Applied Economics, Taylor & Francis Journals, vol. 49(24), pages 2298-2315, May.
    5. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    6. Giovanni Federico & Antonio Tena‐Junguito, 2017. "Lewis revisited: tropical polities competing on the world market, 1830–1938," Economic History Review, Economic History Society, vol. 70(4), pages 1244-1267, November.
    7. Federico, Giovanni & Vasta, Michelangelo, 2010. "Was industrialization an escape from the commodity lottery? Evidence from Italy, 1861-1939," Explorations in Economic History, Elsevier, vol. 47(2), pages 228-243, April.
    8. Gheorghe Săvoiu & Vasile Dinu & Laurenţiu Tăchiciu, 2012. "Romania Foreign Trade in Global Recession, Revealed by the Extended Method of Exchange Rate Indicators," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(31), pages 173-194, February.
    9. Giovanni Federico & Michelangelo Vasta, 2009. "Was industrialization an escape from the commodity lottery? Evidence from Italy, 1861-1940," Department of Economics University of Siena 573, Department of Economics, University of Siena.
    10. Omid Ranjbar & Chien-Chiang Lee & Tsangyao Chang & Mei-Ping Chen, 2014. "Income Convergence in African Countries: Evidence from a Stationary Test With Multiple Structural Breaks," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 371-391, September.
    11. Lee, Yi-Lung & Ranjbar, Omid & Jahangard, Fateme & Chang, Tsangyao, 2020. "Analyzing slowdown and meltdowns in the African countries: New evidence using Fourier quantile unit root test," International Review of Economics & Finance, Elsevier, vol. 65(C), pages 187-198.
    12. Anu Keshiro Toriola & Emmanuel Oladapo George & Walid Gbadebo Adebosin, 2021. "The Nexus Between Commodity Terms and National Terms of Trade of Sub-Sahara African Countries: Implication for Intersectoral Linkage," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 19(1), pages 79-98.
    13. Romero-Ávila, Diego, 2009. "Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP," World Development, Elsevier, vol. 37(6), pages 1051-1068, June.

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