Price Dynamics, Income Distribution, and Fluctuations in World Trade

Wide swings in prices of raw materials, of crude oil in particular, have characterized the development of the world economy in the seventies and eighties. This applies not only to shifts in the terms of trade and thus to the distribution of income from international trade, but also to inflation and fluctuations in world trade and output. The interaction of these factors in the world economy as a closed system serves to explain the most pressing economic problems at the threshold of the nineties, such as the debt crisis of the developing countries, the international trade imbalances, or the instability of the dollar as standard currency.