Commodity terms of trade and individual countries' net barter terms of trade: Is there an empirical relationship?

This paper examines the statistical relationship between aggregate commodity terms of trade and the net barter terms of trade of 66 non-oil developing countries. Stationarity of the estimated long-run equation is tested for each country using Engle-Granger ADF tests. Four different commodity terms of trade series are examined. For more than half the sample a stationary long-run relationship is detected. The responsiveness of the country terms of trade to the overall index varies considerably between countries. These findings suggest that the long-term trend in the overall terms of trade is still relevant to developing countries today. Copyright © 1999 John Wiley & Sons, Ltd.