TRENDS AND CYCLES IN THE NET BARTER TERMS

Economists have had a long-standing interest in the secular trends in primary commodity prices. First, movements in agricultural prices, for example, have formed the basis for discussions of the gradual reallocation of productive resources from agriculture to industry, with the major redistribution of income that this shift entails. Second, the 'limits to growth' literature focused on the increasing relative scarcity of non-renewable primary resources and its possible negative implications for sustaining high rates of economic growth. Finally, development economists, following the lead of Prebisch (1950) and Singer (I950), considered the consequences of secular changes in primary commodity prices for the distribution of the gains from trade among developed and developing countries. The Prebisch-Singer hypothesis that there has been a secular deterioration in the net barter terms of trade (NBTT) between primary products and manufactures has fostered more than 30 years of empirical research. While early work was understandably constrained by the quality of available data, Spraos (I980) and Grilli and Yang (I988) have recently constructed much better data series in order to re-examine commodity price movements. For the most part, however, the statistical analyses have remained elementary - even given the limited objective of merely describing the 'stylised facts' (rather than building structural models to explain movements in commodity prices, say). Exceptions are Sapsford (I985 b), who uses a structural model, and Scandizzo and Diakosawas (i987), who consider time series methods as well as structural