Commodity Prices as a Leading Indicator of Inflation

46 Pages Posted: 15 Feb 2006

See all articles by James M. Boughton

James M. Boughton

International Monetary Fund (IMF) - Policy Development and Review Department; National Bureau of Economic Research (NBER)

William H. Branson

Princeton University - Woodrow Wilson School of Public and International Affairs; National Bureau of Economic Research (NBER)

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Date Written: October 3, 1988

Abstract

Commodity prices may be a leading indicator of inflation, because of the relative importance of flexible auction markets for the determination of these prices. Empirical tests using data for the large industrial countries as a group suggest that changes in commodity prices tend to lead those in consumer prices, and that the inclusion of commodity prices significantly improves the fit of regressions of a multi-country consumer price index. However, there does not appear to be a reliable long-run relationship between the level of commodity prices and the level of consumer prices.

JEL Classification: 132, 134

Suggested Citation

Boughton, James and Branson, William H., Commodity Prices as a Leading Indicator of Inflation (October 3, 1988). IMF Working Paper, Vol. , pp. 1-46, 1988. Available at SSRN: https://ssrn.com/abstract=885033

James Boughton (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

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William H. Branson

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

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National Bureau of Economic Research (NBER)

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