Abstract
This paper examines the duration and magnitude of cycles in world commodity prices. Cycles are a dominant feature of commodity prices, and dealing with the economic consequences of booms and slumps in prices continues to be one of the most challenging issues facing policymakers in commodity-exporting developing countries. We find that there is an asymmetry in commodity price cycles, as price slumps last longer than price booms. How far prices fall in a slump is found to be slightly larger than how far they tend to rebound in a subsequent boom. In addition, for most commodities, the probability of an end to a slump (boom) in prices is independent of the time already spent in the slump (boom).
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