Price Convergence on World Commodity Markets: Fact or Fiction?

This article examines the degree to which commodity prices have converged on world commodity markets over recent decades. Ideally, increases in communications, central bank activities, and globalization would suggest that commodity prices in spatially dispersed markets should become similar over tim...

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Bibliographic Details
Published inInternational regional science review Vol. 28; no. 3; pp. 302 - 329
Main Authors Bukenya, James O., Labys, Walter C.
Format Journal Article
LanguageEnglish
Published Thousand Oaks, CA SAGE Publications 01.07.2005
Sage Publications Ltd
Subjects
Central banks
Commodities
Commodity market
Commodity prices
Convergence
Economic theory
Globalization
Hypothesis testing
International markets
Prices
Regression analysis
Spatial distribution
Studies
World market
commodity markets
spatial price behavior
price convergence
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Summary:This article examines the degree to which commodity prices have converged on world commodity markets over recent decades. Ideally, increases in communications, central bank activities, and globalization would suggest that commodity prices in spatially dispersed markets should become similar over time. To measure convergence, correlation, regression, cointegration, and vector autoregressive methods are employed. Comparable geographic data were assembled for six commodities: coffee, cotton, wheat, lead, copper, and tin, covering the period 1930 through 1998. Overall, the empirical results do not support the convergence hypothesis but rather a pattern of fluctuating divergences.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0160-0176
1552-6925
DOI:10.1177/0160017604267638