Primary commodity prices and the real exchange rate: the case of Australia 1900–91
- 1 March 1996
- journal article
- research article
- Published by Taylor & Francis in The Journal of International Trade & Economic Development
- Vol. 5 (1) , 35-43
- https://doi.org/10.1080/09638199600000003
Abstract
How do real exchange rates of primary commodity exporters react to changes in the relative price of these exports? The relationship between these variables is examined using ninety-two years of Australian data. There is a significant positive correlation. However, the Australian real exchange rate does not display the downward trend that has been observed in the relative price of primary commodities. This is consistent with the hypothesis that the apparent long-run decline in the relative price of primary commodities is an artefact of inadequate quality adjustment in the price series for manufactures.Keywords
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