COMMODITY PRICE FLUCTUATIONS AND MACROECONOMIC ADJUSTMENTS IN THE DEVELOPED ECONOMIES

Commodity price fluctuations have proven troublesome in their destabil izing effects on export revenues and foreign exchange earnings in deve loping countries. Recently, however, attention has been drawn to their role in transmitting inflation and in inducing macroeconomic and fina ncial adjustments in the developed countries. These adjustments range from changes in employment and output (including the business cycle) t o changes in money supply, interest rates, and exchange rates. The imp act of commodity price fluctuations on these and other variables has b een analyzed using time-series methods including Granger-causality tes ts. Data and results are reported for the major OECD countries over th e period 1957 to 1986: United States, United Kingdom, Japan, France, G ermany. and Italy.