The relationship linking primary commodity prices to the OECD economic
performance is analyzed by explicitly accounting for the presence of
a two-way causality. The macroeconomic model is built on a relatively
small number of equations which represent the interplay of five market
s: primary commodity-, financial-, OECD labour-, OECD and LDC product
market. The difference between primary commodity- and manufactured goo
d price formation is emphasized. Quantitative results are provided on
the basis of historical estimations and dynamic simulations.