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Commodity Price Volatility and World Market Integration Since 1700
David S. Jacks,David S. Jacks,Kevin H. O'Rourke,Kevin H. O'Rourke,Kevin H. O'Rourke,Jeffrey G. Williamson,Jeffrey G. Williamson +6 more
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This paper explored commodity and manufactures prices over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700.Abstract:
Poor countries are more volatile than rich countries, and we know this volatility impedes their growth. We also know that commodity price volatility is a key source of those shocks. This paper explores commodity and manufactures prices over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700. Have commodities always shown greater price volatility than manufactures? The answer is yes. Higher commodity price volatility is not the modern product of asymmetric industrial organizations - oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. It was a fact of life deep into the 18th century. Does world market integration breed more or less commodity price volatility? The answer is less. Three centuries of history show unambiguously that economic isolation caused by war or autarkic policy has been associated with much greater commodity price volatility, while world market integration associated with peace and pro-global policy has been associated with less commodity price volatility. Given specialization and comparative advantage, globalization has been good for growth in poor countries at least by diminishing price volatility. But comparative advantage has never been constant. Globalization increased poor country specialization in commodities when the world went open after the early 19th century; but it did not do so after the 1970s as the Third World shifted to labor-intensive manufactures. Whether price volatility or specialization dominates terms of trade and thus aggregate volatility in poor countries is thus conditional on the century.read more
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Rising Food Prices, Food Price Volatility, and Social Unrest
TL;DR: The authors studied the impact of food prices on social unrest and found that food price increases have led to increased social unrest, whereas food price volatility has not associated with increases in social unrest.
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The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions
TL;DR: This paper reviewed the literature, classified according to six channels of causation that have been proposed: (i) long-term trends in world prices, (ii) price volatility, (iii) permanent crowding out of manufacturing, (iv) autocratic/oligarchic institutions, (v) anarchic institutions and (vi) cyclical Dutch Disease.
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Commodity volatility breaks
Andrew Vivian,Mark E. Wohar +1 more
TL;DR: This paper examined whether there are structural breaks in commodity spot return volatility using an iterative cumulative sum of squares procedure and then used GARCH (1,1) to model volatility during each regime.
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The Welfare Impacts of Commodity Price Volatility: Evidence from Rural Ethiopia
TL;DR: The authors developed an analytical framework and an empirical strategy to answer those questions, along with illustrative empirical results based on panel data from rural Ethiopian households, finding that the welfare gains from eliminating price volatility are increasing in household income, making food price stabilization a distributionally regressive policy.
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Autoregressive conditional heteroscedasticity with estimates of the variance of United Kingdom inflation
TL;DR: In this article, a new class of stochastic processes called autoregressive conditional heteroscedastic (ARCH) processes are introduced, which are mean zero, serially uncorrelated processes with nonconstant variances conditional on the past, but constant unconditional variances.
Journal ArticleDOI
Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality
TL;DR: The authors suggests that the rapid increase in the proportion of college graduates in the United States labor force in 1970s may have been a causal factor in both the decline in the college premium during the 1970s and the large increase in inequality during the 1980s.
ReportDOI
Cross-Country Evidence on the Link Between Volatility and Growth
TL;DR: This paper found that countries with higher volatility have lower growth and that government spending-induced volatility is negatively associated with growth even after controlling for both time and country-fixed effects, and that the addition of standard control variables strengthened the negative relationship.
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Cross-Country Evidence on the Link Between Volatility and Growth
Garey Ramey,Valerie A. Ramey +1 more
TL;DR: In this paper, the authors present empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations and find that countries with higher volatility have lower growth.