New study challenges belief in falling commodity prices, impacting global trade.
The Prebisch-Singer hypothesis suggests that prices of raw materials decrease compared to manufactured goods over time. A new study used wavelets analysis to reevaluate this idea and found that it doesn't hold true in the long term for overall commodity prices or most individual commodities. The results also show that the outcome of the analysis depends on how commodity prices are classified. This information is important for policymakers in developing countries that rely on exporting raw materials.