Discussion of Determinants of Agricultural and Mineral Commodity Prices

It is a pleasure to be invited to discuss this rich paper by Jeffrey Frankel and Andrew Rose. After the events of the past few years, with a range of commodity prices exhibiting great volatility, it is not hard to motivate Frankel and Rose’s choice of topic, seen from either a longor medium-term perspective. The authors use annual data, mainly in a panel context, to examine the relationship between real commodity prices and a number of macro and microeconomic series. What they are trying to do, I believe, is to adopt an eclectic approach that combines a classic model of short-run dynamics (articulated in, for example, Frankel 1986) with other considerations that may affect both shortand medium-term movements. Meanwhile, the very long run is relegated to essentially un-modelled trends. The empirical analysis is conducted using a variety of methods that, it is argued, allow us to conclude that the results are relatively robust.