# Impact of commodity terms-of-trade shocks at disaggregate level

## TL;DR

This paper examines how changes in commodity trade terms affect economic growth in developing and emerging countries, both overall and within specific sectors.

## Contribution

The study provides new evidence on commodity terms-of-trade shocks at both aggregate and disaggregate levels for developing countries.

## Key findings

- At the country group level, evidence supports the 'terms-of-trade disconnect puzzle'.
- At the commodity category level, output is mainly affected by shocks to metals and energy.
- Significant shocks tend to occur in the short run rather than the long run.

## Abstract

This paper provides new evidence on the impact of country-specific commodity terms-of-trade shocks on economic growth for developing and emerging countries, not only at aggregate level but also at disaggregate level (agricultural raw materials, food and beverages, energy, and metals). Results suggest: (i) at the country group level, we find evidence supporting the so-called “terms-of-trade disconnect puzzle”; (ii) at the specific country level, the evidence is mixed (i.e., “blessing effect”, “curse effect” or “negligible effect”); (iii) at the commodity category level, it seems that output is mainly affected by shocks to the terms-of-trade for metals, followed to a lesser extent by those for energy; and (iv) statistically significant shocks occur mainly in the short run.