On the Deterioration of the Terms of Trade for Primary Commodities

Abstract

This paper critically reviews some of the most important methods used to test the hypothesis of deterioration of the terms of trade for primary commodities. New tests using both time and frequency domain analysis for the periods 1948-1989 and 1921-1986 are presented. The results obtained support the hypothesis that there is a long-run deterioration of the terms of trade for primary commodities.