Abstract
This paper presents some new evidence in the statistical debate surrounding the Prebisch-Singer hypothesis of a declining long-run trend in the net barter terms of trade between primary products and manufactures. The paper analyses data from a variety of sources covering the period up to and including the early 1980s and finds evidence of a structural instability in the underlying growth path. Once appropriate action is taken to allow for this instability, some strong empirical support for the declining trend hypothesis emerges.
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