Commodity Price Volatility and the Sources of Growth.

Format:

Book

Government document

Author/Creator:

International Monetary Fund.

Contributor:

International Monetary Fund. Middle East and Central Asia Department, issuing body.

Series:

IMF Working Papers; Working Paper ; No. 2012/012

IMF Working Papers

Language:

English

Subjects (All):

Prices--Econometric models.

Prices.

Economic development--Econometric models.

Economic development.

Physical Description:

1 online resource (47 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2012.

Language Note:

English

Summary:

This paper studies the impact of the level and volatility of the commodity terms of trade on economic growth, as well as on the three main growth channels: total factor productivity, physical capital accumulation, and human capital acquisition. We use the standard system GMM approach as well as a cross-sectionally augmented version of the pooled mean group (CPMG) methodology of Pesaran et al. (1999) for estimation. The latter takes account of cross-country heterogeneity and cross-sectional dependence, while the former controls for biases associated with simultaneity and unobserved country-specific effects. Using both annual data for 1970-2007 and five-year non-overlapping observations, we find that while commodity terms of trade growth enhances real output per capita, volatility exerts a negative impact on economic growth operating mainly through lower accumulation of physical capital. Our results indicate that the negative growth effects of commodity terms of trade volatility offset the positive impact of commodity booms; and export diversification of primary commodity abundant countries contribute to faster growth. Therefore, we argue that volatility, rather than abundance per se, drives the "resource curse" paradox.

Contents:

Cover; Contents; I. Introduction; II. Literature Review.; III. The Econometric Model and Methodology.; A. The Econometric Model; B. GMM Methodology; C. CPMG Methodology; IV. Data; A. Commodity Terms of Trade; B. Physical Capital Accumulation; C. Human Capital Stock; D. Productivity; V. Empirical Results; A. Analysis Using Five-Year Averages; A.1 Volatility and Growth; A.2 Volatility and the Channels Affecting Economic Growth; A.3 Robustness Checks; B. Analysis Using Annual Data; B.1 Volatility and Growth; B.2 Volatility and the Channels Affecting Economic Growth; VI. Concluding Remarks

ReferencesTables and Figures; Tables; 1. List of the 118 Countries in the Sample; 2. Definitions and Sources of Variables Used in Regression Analysis; Figures; 1. Commodity Terms of Trade Growth and Volatility; 3. Growth Effects of CTOT Volatility I; 4. Volatility and the Sources of Growth for Commodity Exporters I; 5. Growth Effects of CTOT Volatility II; 6. Volatility and the Sources of Growth for Commodity Exporters II; 7. Growth Effects of CTOT Volatility for Commodity Exporters III; 8. Volatility and the Sources of Growth for Commodity Exporters III

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF title page (ebrary, viewed June 16, 2014).

ISBN:

9781463982317

1463982313

9781463954765

146395476X