# Analytical Studies Branch Research Paper Series A Long-run Version of the Bank of Canada Commodity Price Index, 1870 to 2015

by Ryan Macdonald

Release date: October 11, 2017

## Acknowledgements

The author would like to express his gratitude to all those who helped in the creation of this paper. Discussions with Ilan Kolet during earlier work provided inspiration, while John Baldwin provided guidance and support, without which the project would not have been started. Don Coletti graciously shared data he had collected for an earlier project, which proved invaluable in constructing the index. Danny Leung, Mark Brown and the participants of an internal presentation at Statistics Canada provided valuable feedback on the early stages of the index’s creation. And, most recently, comments from Pierre Duguay and Ian Keay improved the analysis and exposition within the paper.

## Abstract

This paper develops historical estimates of the Bank of Canada commodity price index (BCPI) and links them to modern estimates. Using a collection of historical data sources, it estimates weights and prices sufficiently consistently to merit the construction of long-run estimates that may be linked to the modern Fisher BCPI. The resulting long-run Fisher BCPI estimates show a repeated pattern of rapidly changing prices followed by periods of calm. This pattern is most pronounced since 1900.

Keywords: commodities, super cycles, price index

## Executive summary

Canada is a trading nation that produces significant quantities of resource outputs. Consequently, the behaviour of resource prices that are important for Canada is germane to understanding the progress of real income growth and the prosperity of the country and the provinces. Demand and supply shocks or changes in monetary policy in international markets may exert significant influence on resource prices, and their fluctuations constitute an important avenue for the transmission of external shocks into the domestic economy.

The Bank of Canada commodity price index (BCPI) is used to analyze and better understand these types of links between global commodity markets and important macroeconomic variables and phenomena, such as inflation, the U.S.–Canada exchange rate, the allocation of resources in production, regional growth patterns, and real income growth from the terms-of-trade changes. Currently, the BCPI extends from 1972 to the present. It includes a range of commodities important for Canada and the provinces. But, given its relatively short time span, it cannot be used to examine the long-run effects of commodity prices or how current commodity cycles relate to previous ones.

Drawing on a collection of historical data, this paper fills these information gaps by providing estimates of production weights and prices suitable for creating a historical BCPI. Fisher chain indexes based on the historical data are calculated and linked to the BCPI to create a long-run narrative of the movements of commodity prices important for production in Canada that spans from 1870 to the present.

While historical values for the BCPI and its sub-indexes can be created using historical data, it is important to note that the methods employed create estimates. This occurs because the process of constructing the historical estimates relies on data sources that are not as coherent as modern data sources nor were the data collected for the purpose to which they are put in this paper. Although the historical estimates contain appropriate historical information for economic analysis, they may not be as representative as current estimates.

The historical calculations show a number of historical events, from the emergence of oil production to the electrification of the production process. Therefore, they contain information relevant for understanding processes related to emerging commodity production and structural change. They also contain significant information about the timing of pressure exerted by commodity prices on Canada. And, through time, they show a process in which a number of waves of price increase apply pressure for short periods of time, followed by periods of calm. This pattern is most pronounced since 1900.

## 1 Introduction

Canada is a trading nation that has a comparative advantage in the production of commodities (Coletti 1992). Consequently, the behaviour of resource prices that are important for Canada is germane to understanding the progress of the U.S.–Canada exchange rate (Cayen et al. 2010; Maier and DePratto 2008; Issa, Lafrance and Murray 2008; Bailliu and King 2005; Powell 2005; Amano and van Norden 1993), of real income growth (Brown and Macdonald 2015; Baldwin and Macdonald 2012; Macdonald 2010, 2008, 2007; Duguay 2006; Kohli 2006; Francis 2008; Coletti 1992), of prices for intermediate inputs into the production system (Hirsch 2003), and of inflation (Kolet and Macdonald 2010; Cheung 2009). Because commodities are traded on global markets, demand and supply shocks in these markets can exert significant influence on the allocation of production across industries and regions within Canada. The fluctuations of commodity prices constitute an important avenue for the transmission of external shocks into the domestic economy.

Currently, the Bank of Canada commodity price index (BCPI) extends from 1972 to the present. It includes a range of commodities whose production is important for Canada and the provinces (Kolet and Macdonald 2010). The commodities cover the major agricultural, mineral, energy, forestry and fisheries outputs from the Canadian economy. These outputs are, subsequently, important inputs into upstream production within the Canadian economy. They are also important as exports to world markets that facilitate the purchase of machinery and equipment and consumer goods or that finance repayment of debts to external creditors. However, given the relatively short time span of the index, it is of limited use for understanding long-run relationships between commodity prices and variables of interest, such as inflation or the exchange rate, or for facilitating econometric estimation of the parameters of these relationships. It is also of limited use for examining how current commodity cycles relate to previous ones.

This paper aims to fill this information gap by providing historical BCPI estimates that may be used for this type of inquiry. Estimates of production weights and prices suitable for linking with the BCPI are created by drawing on a collection of historical data. Fisher chain indexes based on the historical data are calculated and linked to the BCPI to create a narrative of the movements of commodity prices important for the Canadian economy that spans from 1870 to the present.

Because the goal is to extend the BCPI, only those commodities currently in the BCPI are included in the historical calculations. These commodities include major agricultural outputs, major mineral products, major forestry products, major energy products and fisheries products. Owing to the breadth of commodities in the BCPI, the decision to maintain the current commodity bundle over historical periods does not cause significant measurement issues. This is because over most of the history of Canada, the same types of products are important for production and for export, but their relative importance changes (Baldwin and Macdonald 2012). Consequently, applying a chain-index formula allows the weights for the index to be continuously updated, and this makes the index relevant for the entirety of the period from 1870 to the present.

Nevertheless, it is important to note that the further one goes into the past, the less representative the index is likely to be. This is the case because the BCPI mixes Canadian production values with global prices for commodities that are measured in U.S. dollars. At present, it can be argued that the U.S. price represents the world price and, thus, the price reflecting supply and demand conditions on global markets that affect Canadian producers.Note 1 However, for earlier periods, this may not be the case. In particular, prior to the Second World War, prices quoted in British pounds may be equally or more representative of world prices. Consequently, it is not clear a priori that continued use of U.S. prices is appropriate for gauging the effect of changes in global commodity markets on the Canadian economy. Moreover, in the period between 1870 and the First World War, an important convergence in commodities between the Old World and the New World occurred (O’rourke and Williamson 1994). This convergence raised the price of commodities in the United States relative to the United Kingdom. Therefore, it is expected that different price pressures could be found by using U.K. prices rather than U.S. prices during the early part of the sample period.

Here, the assumption is made that prices in U.S. dollars are sufficiently representative of the price changes relevant to Canadian producers in global commodity markets that they may be used to calculate historical index values. This assumption is derived from the fact that the convergence between New World and Old World prices stemmed from dramatic changes in transportation costs. As a result, the same type of convergent forces should be present for both the Canadian economy and the U.S. economy with respect to Europe. The applicability of this assumption is borne out in the results section below, which shows that historical BCPI estimates are consistent with other data sources.

The remainder of this paper is structured as follows. Section 2 describes the data sources used, while Section 3 describes the methodology. Section 4 describes the results both in terms of the production shares and the chained indexes themselves. Section 5 concludes the paper.

## 2 Data

The data collected here, which are used to compile estimates of the historical BCPI, are drawn from a variety of sources with different methodologies. Great effort has been made to find source data that are consistent through time and that are consistent with the composition of the underlying commodities.

In the subsections that follow, the source data for values and prices across the commodities used to calculate the historical BCPI are discussed. The discussion follows the major groups for which commodity data are collected: energy, metals and minerals, forestry, agriculture, and fisheries. The data are grouped in this fashion to match the structure of the BCPI and its sub-aggregate indexes, and because the source of historical data is often the same for similar types of commodities. In the discussion, the span of data differs from that in the tables. The data discussions indicate the full span of the data available while the tables indicate only the data employed in the index. Differences can occur, for example, because estimates for the value of production extend farther into the past than do the price series, or vice versa.

### 2.1 Energy

Data for historical energy prices are drawn from two sources (Table 1). Estimates of the U.S. price of oil are taken from the U.S. Energy Information Administration’s (EIA) U.S. Crude Oil First Purchase Price (EIA 2017), measured in U.S. dollars per barrel. The EIA provides a time series spanning 1870 to 1972. For coal and natural gas, prices are taken from Manthy (1978). The coal price corresponds to U.S. dollars per ton of anthracite. The natural gas price is in U.S. cents per million cubic feet. The coal and natural gas prices cover the 1870-to-1972 and 1919-to-1972 periods, respectively.

Data on production values for energy are drawn from two sources. Production values from 1961 to 1972 are taken from the input–output series used in the currently published BCPI (Kolet and Macdonald 2010). Historical production values are taken from the Historical Statistics of Canada (Statistics Canada n.d.a) for the three energy commodities.

Values for coal extend from 1870 to 1961. Values for 1871 to 1873 are estimated based on interpolated estimates of the price per ton of coal from Series Q1-5 of Historical Statistics of Canada multiplied by the tons of production from Series Q6-12 (Quirin n.d.a). The interpolation is applied either because of missing data points or because of unexplained outliers in Series Q6–12 in the years 1871, 1872 and 1873. In addition, the value for coal production in 1945 contains a typo. The average of 1944 and 1946 is used in its place.

Values for natural gas span 1892 to 1962, while values for crude oil span 1870 to 1962. Oil production values from the Historical Statistics of Canada (Quirin, n.d.b) span 1886 to 1962. For the years 1870 to 1885, the volume of production (thousands of barrels per day) is multiplied by the price per barrel from the EIA to create a nominal dollar projector series. The growth rate of this series is then used as a basis to back-cast the historical growth rates for the value of production. However, unlike other series where the projector is taken “as is,” the variance of the projector series for oil is larger than the variance of the production series. As a result, a regression is used to predict the production-value growth rate based on the growth rates of the projector.

Table 1
Data sources for historical prices for the energy commodity group
Table summary
This table displays the results of Data sources for historical prices for the energy commodity group. The information is grouped by Commodity (appearing as row headers), Prices (U.S. dollars) and Values (Canadian dollars) (appearing as column headers).
Commodity Prices (U.S. dollars) Values (Canadian dollars)
Source Price per unit Time period Source Time period
Coal Manthy (1978)Table 1 Note 1 Dollars per ton 1870 to 1972 Kolet and Macdonald (2010)Table 1 Note 3 1961 to 1972
Historical Statistics of Canada (Quirin n.d.a)Table 1 Note 4 1870 to 1961
Natural gas Manthy (1978) Cents per million cubic feet 1919 to 1972 Kolet and Macdonald (2010) 1961 to 1972
Historical Statistics of Canada (Quirin n.d.b)Table 1 Note 5 1919 to 1961
Crude petroleum EIA (2017)Table 1 Note 2 Dollars per barrel 1870 to 1972 Kolet and Macdonald (2010) 1961 to 1972
Historical Statistics of Canada (Quirin n.d.b) 1886 to 1961
Regression-based predictionTable 1 Note 6 1870 to 1885

### 2.2 Metals and minerals

Historical estimates of prices for metals and minerals are drawn from three sources (Table 2). Gold, silver and nickel prices are taken from the data collected for Coletti (1992). Prices for copper, zinc and lead are taken from Manthy (1978), while prices for aluminum and potash are taken from the U.S. Geological Survey (Kelly and Matos 2014). Data for iron prices come from the U.S. Geological Survey for the period from 1900 to 1972. For the years 1870 to 1900, the pig iron price index from Manthy (1978) is used to back-cast the price. Although the pig iron price represents a more manufactured price for iron than the ore price from the U.S. Geological Survey, there exists a correlation in the growth rates of the two series for the period from 1901 to 1912 (0.73) reasonable enough to form a basis for historical linking.

Historical production values are derived from three sources. For the period from 1961 to 1973, production values are taken from Statistics Canada’s input–output system (Statistics Canada, n.d.c) and CANSIM table 152-0005 (Statistics Canada, n.d.d). For years prior to 1961, production values for gold, silver, nickel, copper, zinc, lead and iron are taken from the Historical Statistics of Canada (Quirin, n.d.a), Series P1-26, “Canadian production of principal metallic minerals, 1886 to 1975”. Aluminum is modeled based on exports from Series P27-58, “Canadian exports of principal metallic minerals, 1968 to 1977.” Estimates for potash production come from CANSIM table 152-0005 (Statistics Canada n.d.d) and 512-0002 (Statistics Canada n.d.e).

Table 2
Data sources for historical prices for the metals and minerals commodity group
Table summary
This table displays the results of Data sources for historical prices for the metals and minerals commodity group. The information is grouped by Commodity (appearing as row headers), Prices (U.S. dollars) and Values (Canadian dollars) (appearing as column headers).
Commodity Prices (U.S. dollars) Values (Canadian dollars)
Source Price per unit Time period Source Time period
Gold Coletti (1992)Table 2 Note 1 Dollars per ounce 1870 to 1971 Statistics Canada (n.d.c)Table 2 Note 4 1961 to 1972
Historical Statistics of Canada (Quirin n.d.a)Table 2 Note 5 1886 to 1961
Silver Coletti (1992) Dollars per ounce 1870 to 1971 Statistics Canada (n.d.c) 1961 to 1972
Historical Statistics of Canada (Quirin n.d.a) 1887 to 1961
Nickel Coletti (1992) Dollars per pound 1879 to 1971 Statistics Canada (n.d.c) 1961 to 1972
Historical Statistics of Canada (Quirin n.d.a) 1889 to 1961
Copper Manthy (1978)Table 2 Note 2 Cents per pound 1870 to 1972 Statistics Canada (n.d.c) 1961 to 1972
Historical Statistics of Canada (Quirin n.d.a) 1886 to 1961
Aluminum Kelly and Matos (2014)Table 2 Note 3 Dollars per ton 1900 to 1972 Statistics Canada (n.d.c) 1961 to 1972
Quirin (n.d.a) 1904 to 1961
Zinc Manthy (1978) Cents per pound 1870 to 1972 Statistics Canada (n.d.c) 1961 to 1978
Historical Statistics of Canada (Quirin n.d.a) 1898 to 1961
Lead Manthy (1978) Cents per pound 1870 to 1972 Statistics Canada (n.d.c) 1961 to 1972
Historical Statistics of Canada (Quirin n.d.a) 1887 to 1961
Iron Kelly and Matos (2014) Dollars per ton 1900 to 1972 Statistics Canada (n.d.c) 1961 to 1972
Manthy (1978) Pig iron index 1870 to 1900 Historical Statistics of Canada (Quirin n.d.a) 1887 to 1961
Potash Kelly and Matos (2014) Dollars per ton 1900 to 1972 Statistics Canada (n.d.d)Table 2 Note 6, Statistics Canada (n.d.e)Table 2 Note 7 1966 to 1961

### 2.3 Forestry

Historical price estimates for forestry commodities are drawn from a number of sources (Table 3). Lumber prices are taken from Manthy (1978) for the years 1870 to 1973. Pulp prices are taken from Manthy (1978) for the years 1916 to 1973. To increase the range of the price data, Urquhart’s (1993) price for pulp is converted from Canadian dollars to U.S. dollars and used to back-cast the price series between 1875 and 1915. Prices for newsprint are back-cast using the Bureau of Labor Statistics (BLS) newsprint price index (BLS n.d.b) between 1947 and 1971. For the years 1890 to 1946, the National Bureau of Economic Research newsprint price (NBER n.d.a, b, c, d) is used to project prices historically.

Historical production values for forestry commodities are drawn from Statistics Canada’s input–output tables for the years 1961 to 1972 (Statistics Canada, n.d.c). Estimates from the Historical Statistics of Canada (Osborn n.d.) are used between 1908 and 1960. There is no overlapping period for lumber or newsprint values in 1961, so the levels from the input–output tables and the Historical Statistics of Canada (Osborn n.d.) are used as published. For the years before 1908, estimates of forestry production from Urquhart (1993) are used to back-cast the levels from the Historical Statistics of Canada (Osborn n.d.). For pulp, export prices and production values are used to interpolate for 1961 and production values are then used to back-cast to 1917. From 1880 to 1917, estimates from Urquhart (1993) are employed to back-cast production values.

Table 3
Data sources for historical prices for the forestry commodity group
Table summary
This table displays the results of Data sources for historical prices for the forestry commodity group. The information is grouped by Commodity (appearing as row headers), Prices (U.S. dollars) and Values (Canadian dollars) (appearing as column headers).
Commodity Prices (U.S. dollars) Values (Canadian dollars)
Source Price per unit Time period Source Time period
Lumber Manthy (1978)Table 3 Note 1 Dollars per thousand board feet 1870 to 1973 Statistics Canada (n.d.c)Table 3 Note 8 1961 to 1973
Historical Statistics of Canada (Osborn n.d.)Table 3 Note 9 1908 to 1960
Urquhart (1993) 1870 to 1908
Pulp Manthy (1978) Dollars per cord 1916 to 1973 Statistics Canada (n.d.c) 1961 to 1973
Urquhart (1993)Table 3 Note 2 Canadian dollar price converted to U.S. dollars 1875 to 1916 Historical Statistics of Canada (Osborn n.d.) 1917 to 1961
Urquhart (1993) 1880 to 1917
Newsprint BLS (n.d.b)Table 3 Note 3 Index 1947 to 1972 Statistics Canada (n.d.c) 1961 to 1973
NBER (n.d.a, b,
c, d)
Cents per pound 1890 to 1947 Historical Statistics of Canada (Osborn n.d.) 1917 to 1960
Urquhart (1993) 1870 to 1917

### 2.4 Agriculture

Historical agriculture prices are predominantly derived from Manthy (1978) (Table 4). Prices for cattle only are used as a proxy for prices for cattle and calves. Price series for cattle, hogs, wheat, barley, corn and potatoes extend from 1870 to 1973. U.S. dollar prices for canola are derived from Statistics Canada data (Statistics Canada, n.d.b) by multiplying the average farm price in Canadian dollars by the U.S.–Canada exchange rate.

Historical values for agricultural production are derived from a number of sources: Statistics Canada ( n.d.b, c), the Historical Statistics of Canada (Trant n.d.), and Urquhart (1993).

Values for hogs and cattle and calves come from linking input–output estimates to estimates from the Historical Statistics of Canada (Trant n.d.) and Urquhart (1993). For each commodity, the growth rates of nominal estimates are used to back-cast the level of production from the 1972 value used to calculate the current BCPI.

For wheat, an index of the nominal value of wheat production is calculated by multiplying wholesale market prices for wheat by the thousands of bushels produced from the Historical Statistics of Canada (Trant n.d.). The growth rates from the index values are then used to back-cast the value of wheat production found in the input–output tables (Statistics Canada n.d.c).

For barley, estimates of the number of tons produced are multiplied by the price per tonne, to estimate the nominal value of production from 1908 to 1973. Growth rates from nominal farm sales of barley from Urquhart (1993) are then used to back-cast production values to 1870.

Estimates for the value of canola production for the years 1949 to 1973 are taken directly from the Historical Statistics of Canada (Trant n.d.), while estimates for corn are derived by summing the value of production of corn for grain and corn for fodder. For each type of corn, the number of tonnes produced is multiplied by the average farm price per tonne.

Potato gross farm values are from the Historical Statistics of Canada (Trant n.d.) for 1908 to 1973. Growth rates from Urquhart (1993) are used to back-cast the 1870-to-1907 period.

Table 4
Data sources for historical prices for the agriculture commodity group
Table summary
This table displays the results of Data sources for historical prices for the agriculture commodity group. The information is grouped by Commodity (appearing as row headers), Prices (U.S. dollars) and Values (Canadian dollars) (appearing as column headers).
Commodity Prices (U.S. dollars) Values (Canadian dollars)
Source Price per unit Time period Source Time period
Cattle and calves Manthy (1978)Table 4 Note 1 Dollars per hundredweight 1870 to 1973 Statistics Canada (n.d.c)Table 4 Note 4 1961 to 1973
Historical Statistics of Canada (Trant n.d.)Table 4 Note 5 1914 to 1975
Urquhart (1993)Table 4 Note 6 1870 to 1914
Hogs Manthy (1978) Cents per pound 1870 to 1973 Statistics Canada (n.d.c) 1961 to 1973
Historical Statistics of Canada (Trant n.d.) 1914 to 1975
Urquhart (1993) 1870 to 1914
Wheat Manthy (1978) Dollars per bushel 1870 to1973 Statistics Canada (n.d.c) 1961 to 1973
Historical Statistics of Canada (Trant n.d.) 1870 to 1973
Barley Manthy (1978) Dollars per bushel 1870 to 1973 Statistics Canada (n.d.b) 1908 to 1973
Urquhart (1993) 1870 to 1909
Canola Statistics Canada (n.d.b)Table 4 Note 2 Average Canadian dollar farm price (dollars per tonne) converted to U.S. dollarsTable 4 Note 3 1949 to 1973 Historical Statistics of Canada (Trant n.d.) 1949 to 1973
Corn Manthy (1978) Dollars per bushel 1870 to 1973 Statistics Canada (n.d.b) 1908 to 1973
Potatoes Manthy (1978) Dollars per hundredweight 1870 to 1973 Historical Statistics of Canada (Trant n.d.) 1908 to 1973
Urquhart (1993) 1870 to 1909

### 2.5 Fisheries

The fisheries component of the historical index comprises only finfish (Table 5). Prices are based on the BLS finfish price index (BLS n.d.a), which is the same index used in the BCPI. The annual values span the period from 1947 to the present, and values from the earliest data to 1972 are used for the historical BCPI. Estimates for the value of finfish production come from the Historical Statistics of Canada Morse (n.d.) for the years 1906 to 1972.

Table 5
Data sources for historical prices for the fish commodity group
Table summary
This table displays the results of Data sources for historical prices for the fish commodity group. The information is grouped by Commodity (appearing as row headers), Prices (U.S. dollars) and Values (Canadian dollars) (appearing as column headers).
Commodity Prices (U.S. dollars) Values (Canadian dollars)
Source Price per unit Time period Source Time period
Finfish BLS (n.d.a)Table 5 Note 1 Finfish price index 1947 to 1973 Historical Statistics of Canada (Morse n.d.)Table 5 Note 2 1908 to 1972

## 3 Methodology

The methodology for the historical BCPI has two components, which are discussed in the following two subsections. The first outlines the choice of index used in the calculation. The second details the choices of commodities to include in the index in a particular year.

### 3.1 Index calculations

The BCPI uses a chained Fisher index formula (Fisher 1922). The index was chosen for the BCPI to ensure conformity with other indexes currently in use (Kolet and Macdonald 2010) and because of its preferred properties (Diewert 1992). For consistency, the historical estimate of the index that is presented here uses the same Fisher formula as the modern BCPI. For the i = 1,...,N commodities used in the historical index calculation, the Fisher price index between periods t and t–1 is defined as

Where LP is the Laspeyres price index and PP is the Paasche price index.

The Laspeyres index holds quantities fixed in the first period and allows prices to change. It is defined as

The Paasche index holds quantities fixed in the second period and allows prices to change. It is defined as

The value for the Fisher index for each pair of years, beginning with 1870 and 1871 and concluding with 1971 and 1972, is calculated. The link values are then used to chain the BCPI historically back to 1870 as

The same calculation is applied to each of the sub-indexes to create historically chained versions of the BCPI for energy, for metals and minerals, for forestry and for agriculture. The chain values for the BCPI for fisheries consist only of the price series for finfish from the BLS. Consequently, the finfish price index growth rates are used to historically chain the modern series without the need for a Fisher index calculation.

### 3.2 Sample size

Through time, the composition of Canada’s commodity output changes, as new commodities are extracted, grown or produced. As a result, the commodity basket used to calculate the historical BCPI evolves over time. The practice adopted here for the historical BCPI is to add new commodities as they enter into production. To include a new commodity in the index, it must be in production for two consecutive years, as this is the span necessary to calculate the index.

There are two other factors that cause additional complications for constructing the index.

The first relates to data constraints. To include a commodity in the index requires two consecutive years of data on its price and the value of its production. In some cases, prices exist for the whole 1870-to-1972 period, but data on the value of production are lacking, even though production is known to have occurred. This is particularly the case for mining. Data on the value of mineral production used in the index begin between 1886 and 1889 for most mineral components. Prior to 1886, there do not appear to be measures of mineral production even though historical events in mining can be traced back to at least 1604 (Cranstone 2002). As a consequence, particular periods show an increase in the number of commodities that does not correspond with an onset of production, but rather with the advent of the publication of data.

The second complicating factor is iron ore. Iron ore production in Canada goes through a number of periods of production followed by periods when production stops. This on-again, off-again feature of iron ore production means that it repeatedly enters and exits the commodity bundle used to calculate the historical BCPI.

The pattern of expansion and contraction in the number of commodities in the commodity bundle used for the historical BCPI means that one of two strategies can be used for the index calculation.

One strategy is to use only those commodities for which there are data for the entire 1870-to-1972 period. This strategy greatly reduces the available commodity bundle and is not adopted here.

The alternative strategy is to adjust the commodity bundle used to calculate the index as new commodities are developed or as new data sources become available. The historical BCPI and its sub-indexes for energy, for metals and minerals, for forestry and for agriculture therefore have commodity bundles that expand and contract as commodity production evolves. The sub-index for fisheries does not evolve, as it is based only on finfish prices from the BLS (BLS n.d.a). However, when linked with the BCPI, the bundle expands in 1972/1973, when shellfish is added.

The process used to adjust the commodity bundle is shown in Table 6 for the historical BCPI and its sub-aggregate indexes. The calculations begin with a restricted set of commodities in 1870, and then are adjusted through time. The early period, particularly around 1886, has a more rapid expansion of the commodity bundle, as data on metals and minerals become available. Additions of commodities such as aluminum, potash and canola occur once production begins. Iron ore production in Canada goes through a number of starts and stops, and iron is the only commodity to repeatedly enter and exit the commodity bundle.

Table 6
Additions and subtractions to the Bank of Canada commodity price index through time
Table summary
This table displays the results of Additions and subtractions to the Bank of Canada commodity price index through time. The information is grouped by Year (appearing as row headers), Bank of Canada commodity price index and Bank of Canada commodity price index, sub-indexes, calculated using Energy, Forestry, Metals and minerals, Agriculture and Fish units of measure (appearing as column headers).
Year Bank of Canada commodity price index Bank of Canada commodity price index, sub-indexes
Energy Forestry Metals and minerals Agriculture Fish
1870 Begin index with coal, oil, lumber, wheat, barley, potatoes, cattle, hogs Begin index with coal, oil Begin index with lumber Note ...: not applicable Begin index with wheat, barley, potatoes, cattle, hogs Note ...: not applicable
1880/1881 Add pulp Note ...: not applicable Add pulp Note ...: not applicable Note ...: not applicable Note ...: not applicable
1886/1887 Add gold, copper Note ...: not applicable Note ...: not applicable Begin index with gold, copper Note ...: not applicable Note ...: not applicable
1887/1888 Add silver, lead, iron Note ...: not applicable Note ...: not applicable Add silver, lead, iron Note ...: not applicable Note ...: not applicable
1889/1890 Add nickel Note ...: not applicable Note ...: not applicable Add nickel Note ...: not applicable Note ...: not applicable
1890/1891 Add newsprint Note ...: not applicable Add newsprint Note ...: not applicable Note ...: not applicable Note ...: not applicable
1899/1900 Subtract iron Note ...: not applicable Note ...: not applicable Subtract iron Note ...: not applicable Note ...: not applicable
1902/1903 Add zinc Note ...: not applicable Note ...: not applicable Add zinc Note ...: not applicable Note ...: not applicable
1904/1905 Add aluminum Note ...: not applicable Note ...: not applicable Add aluminum Note ...: not applicable Note ...: not applicable
1906/1907 Add iron Note ...: not applicable Note ...: not applicable Add iron Note ...: not applicable Note ...: not applicable
1909/1910 Add corn Note ...: not applicable Note ...: not applicable Note ...: not applicable Add corn Note ...: not applicable
1919/1920 Add natural gas Add natural gas Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1923/1924 Subtract iron Note ...: not applicable Note ...: not applicable Subtract iron Note ...: not applicable Note ...: not applicable
1939/1940 Add iron Note ...: not applicable Note ...: not applicable Add iron Note ...: not applicable Note ...: not applicable
1947/1948 Add finfish Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Begin index with finfish
1949/1950 Add canola Note ...: not applicable Note ...: not applicable Note ...: not applicable Add canola Note ...: not applicable
1966/1967 Add potash Note ...: not applicable Note ...: not applicable Add potash Note ...: not applicable Note ...: not applicable
1972/1973 Add shellfish Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Add shellfish

## 4 Historical estimates

The data on the historical BCPI provide information on two dimensions pertinent for calculating the historical index: information on production shares and the index values. Both dimensions are presented below. In all cases, historical BCPI values are linked to the BCPI to create a long-run BCPI that covers the period from 1870 to 2015. The information presented on production shares below focuses only on the data employed to create the long-run BCPI. In some cases, additional data exist on production shares, but it is not reported as it does not contribute to the index calculation.

### 4.1 Bank of Canada commodity price index shares

One major advantage of using a chained index formula is that it constantly updates itself for changes in the production composition and, thus, includes information on the extent of these changes. In broad terms, the composition of the commodities included in the long-run BCPI, in terms of the value of production in Canadian dollars, has changed greatly over the 145 years for which data are available (Chart 1).

Initially, commodity production was dominated by agricultural output. This is the case both because the majority of commodity production was derived from agricultural products at the time, and because there is limited information available for the first 15 years, particularly about mining and mineral commodities. The other major source of commodity production in the early period was forestry.

Data table for Chart 1
Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1. The information is grouped by Year (appearing as row headers), Energy, Metals and minerals , Forestry, Agriculture and Fish, calculated using percent units of measure (appearing as column headers).
Year Energy Metals and minerals Forestry Agriculture Fish
percent
1870 1.15 0.00 10.53 88.31 0.00
1871 1.35 0.00 10.58 88.08 0.00
1872 1.64 0.00 11.23 87.14 0.00
1873 1.49 0.00 16.13 82.37 0.00
1874 0.94 0.00 13.04 86.02 0.00
1875 0.90 0.00 9.80 89.30 0.00
1876 1.40 0.00 10.22 88.37 0.00
1877 1.34 0.00 11.48 87.19 0.00
1878 1.27 0.00 9.60 89.13 0.00
1879 1.35 0.00 9.96 88.68 0.00
1880 1.36 0.00 11.45 87.19 0.00
1881 1.02 0.00 10.79 88.19 0.00
1882 1.22 0.00 13.59 85.19 0.00
1883 1.45 0.00 17.59 80.96 0.00
1884 1.70 0.00 16.03 82.27 0.00
1885 1.76 0.00 15.18 83.06 0.00
1886 1.94 1.05 16.66 80.35 0.00
1887 1.95 1.01 14.58 82.46 0.00
1888 2.22 1.33 15.55 80.90 0.00
1889 2.38 1.70 16.42 79.50 0.00
1890 3.04 1.90 18.96 76.10 0.00
1891 3.44 2.57 18.98 75.02 0.00
1892 3.92 2.32 20.44 73.33 0.00
1893 4.44 2.91 21.35 71.30 0.00
1894 4.23 2.78 19.59 73.40 0.00
1895 4.57 4.01 19.33 72.10 0.00
1896 4.95 5.40 21.32 68.33 0.00
1897 3.93 7.42 18.26 70.39 0.00
1898 3.60 9.89 14.95 71.55 0.00
1899 4.36 13.31 16.91 65.41 0.00
1900 5.29 16.66 18.25 59.79 0.00
1901 4.02 14.12 14.57 67.29 0.00
1902 4.19 10.74 14.96 70.11 0.00
1903 4.36 10.02 16.17 69.46 0.00
1904 4.72 8.99 16.48 69.80 0.00
1905 4.59 10.64 17.19 67.58 0.00
1906 4.56 10.93 15.74 68.77 0.00
1907 5.33 10.52 20.07 64.09 0.00
1908 5.36 10.33 18.41 65.91 0.00
1909 4.20 8.74 17.15 69.91 0.00
1910 5.44 10.54 20.30 63.72 0.00
1911 3.60 7.74 16.27 72.40 0.00
1912 4.89 10.39 16.02 68.71 0.00
1913 4.83 10.52 14.35 70.30 0.00
1914 4.24 9.32 14.40 72.04 0.00
1915 2.99 8.75 11.21 77.06 0.00
1916 2.91 9.82 10.67 76.60 0.00
1917 2.79 8.60 13.35 75.25 0.00
1918 3.34 8.46 14.65 73.55 0.00
1919 3.75 5.69 17.31 73.24 0.00
1920 4.95 5.38 23.91 65.75 0.00
1921 6.75 4.81 22.97 65.48 0.00
1922 5.93 5.82 22.17 66.09 0.00
1923 5.80 7.07 24.45 62.69 0.00
1924 4.15 8.36 24.40 63.09 0.00
1925 3.75 7.98 21.57 66.71 0.00
1926 4.40 7.97 23.10 64.53 0.00
1927 4.26 7.93 22.03 65.78 0.00
1928 4.23 8.81 22.52 64.44 0.00
1929 5.11 11.48 27.74 55.68 0.00
1930 5.80 13.80 29.76 50.65 0.00
1931 6.58 16.92 30.04 46.46 0.00
1932 6.49 17.10 23.86 52.55 0.00
1933 6.29 21.68 20.44 51.59 0.00
1934 5.31 23.45 22.73 48.51 0.00
1935 5.42 24.43 21.87 48.28 0.00
1936 4.76 24.22 22.59 48.43 0.00
1937 4.89 28.40 25.79 40.92 0.00
1938 5.77 30.64 22.72 40.86 0.00
1939 4.49 26.65 20.35 48.51 0.00
1940 4.32 26.64 24.48 44.55 0.00
1941 5.04 31.05 28.18 35.73 0.00
1942 4.20 24.89 22.87 48.03 0.00
1943 4.43 23.93 22.30 49.34 0.00
1944 4.09 19.74 22.88 53.29 0.00
1945 4.64 17.34 28.21 49.81 0.00
1946 4.16 13.39 32.70 49.76 0.00
1947 3.70 15.15 36.06 45.09 0.00
1948 4.81 15.46 34.20 45.53 0.00
1949 5.14 16.20 32.86 44.58 1.23
1950 5.05 16.27 33.29 44.01 1.38
1951 4.77 15.35 32.35 46.30 1.23
1952 5.32 15.25 30.78 47.46 1.20
1953 6.81 16.37 32.99 42.63 1.20
1954 9.50 19.07 35.77 34.20 1.47
1955 8.55 21.16 33.46 35.74 1.10
1956 10.11 22.78 32.38 33.48 1.25
1957 11.74 22.39 32.66 32.06 1.16
1958 10.49 19.75 31.51 36.74 1.51
1959 10.41 21.81 31.26 35.32 1.19
1960 10.27 23.48 31.73 33.52 1.00
1961 12.21 23.20 33.40 29.99 1.20
1962 12.50 22.02 30.31 33.92 1.25
1963 12.41 21.47 29.28 35.78 1.06
1964 12.59 22.75 30.35 33.20 1.11
1965 12.59 23.71 29.96 32.67 1.08
1966 12.26 22.60 28.18 35.80 1.16
1967 13.69 25.65 28.73 30.90 1.03
1968 13.85 26.02 29.91 29.12 1.10
1969 14.07 24.52 31.33 29.17 0.91
1970 15.79 27.83 29.40 25.98 1.01
1971 17.45 24.22 28.94 28.46 0.93
1972 17.78 20.77 30.20 29.86 1.39
1973 17.46 19.34 28.30 33.54 1.37
1974 21.85 19.63 27.51 30.03 0.98
1975 26.29 18.62 23.02 31.18 0.89
1976 27.77 17.61 25.97 27.53 1.12
1977 31.04 17.80 27.13 22.78 1.25
1978 30.37 16.17 27.16 24.76 1.55
1979 30.97 17.20 26.98 23.28 1.57
1980 31.31 20.83 23.58 23.22 1.05
1981 32.24 19.00 23.09 24.44 1.24
1982 39.27 14.04 20.79 24.59 1.31
1983 41.27 14.70 21.25 21.60 1.18
1984 41.74 16.26 21.80 19.15 1.06
1985 42.70 15.04 22.22 18.69 1.34
1986 30.36 18.87 28.02 21.01 1.73
1987 30.74 18.91 30.97 17.40 1.98
1988 26.14 23.25 31.44 17.27 1.90
1989 27.20 22.48 30.49 18.18 1.64
1990 31.80 19.51 27.91 19.07 1.70
1991 31.08 20.84 27.25 19.02 1.80
1992 31.80 20.04 27.71 18.69 1.76
1993 31.31 18.05 28.88 20.13 1.62
1994 30.07 18.53 31.23 18.41 1.76
1995 26.17 19.20 34.92 18.05 1.65
1996 30.88 17.74 30.18 19.84 1.35
1997 31.77 18.38 30.82 17.66 1.37
1998 29.35 19.42 31.10 18.63 1.50
1999 34.66 16.20 30.52 17.01 1.62
2000 45.49 14.10 25.54 13.48 1.39
2001 46.92 13.95 23.16 14.57 1.41
2002 45.69 14.76 23.88 14.10 1.56
2003 53.81 12.82 19.37 12.59 1.41
2004 54.49 13.87 18.68 11.70 1.26
2005 60.60 13.41 15.33 9.70 0.96
2006 59.15 17.00 13.80 9.22 0.83
2007 57.10 18.97 12.18 10.90 0.85
2008 62.52 16.58 8.66 11.54 0.70
2009 59.47 16.11 8.89 14.59 0.94
2010 59.05 18.52 9.26 12.30 0.87
2011 58.99 19.28 7.62 13.26 0.85
2012 58.92 18.02 7.69 14.49 0.88
2013 60.63 16.08 8.15 14.30 0.84
2014 63.41 15.41 7.79 12.42 0.97

Over time, production shifted toward new commodity groups: first forestry, then metals and minerals, and finally energy.

Forestry production gained importance through the first 80 years of the sample, as new publishing industries in the United States, particularly newspapers, created increased demand for pulp and paper, and as new production techniques, transportation infrastructure and trade agreements permitted the increased demand to be met from Canadian supply. The share of forestry in long-run BCPI commodity production peaked just after the Second World War, after which the contribution from forestry products began a slow decline. Other commodities, particularly oil, gained prominence. Forestry experienced a brief resurgence in its share of long-run BCPI commodity production in the 1980s and 1990s, but fell away rapidly after 1999, as demand for paper products in the United States declined with the widespread market penetration of electronic media.

Data on mining and mineral commodities begin to enter the long-run index calculation in 1886. Initially, there was little impact on the composition of production from metals and minerals. By 1891, the value of mining had reached 2.57% of production and proceeded to rise rapidly as the Klondike Gold Rush in Yukon led to an increase in gold extraction. As the gold fields played out, the relative value of metal and mineral production declined, even as additional commodities were added to the long-run index. The next large adjustment came during the Great Depression. A combination of weak agricultural prices and, in the mid-1930s, an attempt by the Federal Reserve to jump-start inflation by revaluing gold helped increase the share of metal and mineral production in the index. After the recovery in agricultural prices, the share of production in the long-run BCPI commodity bundle derived from metals and minerals declined by around half. The share of production then expanded through the 1950s and 1960s to reach a high point in 1970, before tending to decline until the end of the period.

Energy products have the most dramatic effect on the overall composition of commodity production in the latter half of the 20th century, across all long-run BCPI subgroups. After rising modestly through the first 80 years, the share of energy production rose rapidly after 1947. Initially, the increased share of energy production in the BCPI commodity bundle coincided with a decline in the share of agricultural products. As time progressed, however, the share of production from energy began to erode the influence of forestry, and then metals and minerals.

### 4.2 Bank of Canada commodity price index subgroup shares by commodity

#### 4.2.1 Energy

Across energy commodities, there is a transition from coal towards oil and natural gas over the 145 years presented (Chart 2).

At the start of the period, production is almost equally split between coal and oil. However, oil had a high price over the first 15 years of the sample that declined as production rose, so, while its production share is large, the quantity of oil produced was minor.Note 2 During this part of the sample period, the oil industry in Canada was centered in Ontario, where, for example, the area around Oil Springs experienced an oil boom in the mid-1880s. As the oil played out, production and its share of output in the BCPI declined until the 1920s, when oil production began around Norman Wells in the Northwest Territories. But, it was not until 1947, when oil was discovered at Leduc, Alberta, that oil became the major source of energy production in Canada.

After the expansion of oil production that occurred in Alberta and Saskatchewan in the 1950s and 1960s, the share of energy production from natural gas began to increase. This was a return to a 50-year trend that was interrupted by the rapid expansion of oil production in the middle of the century. During the resource boom of the 2000s, the trend was again interrupted as the share of oil in production increased rapidly.

Data table for Chart 2
Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2. The information is grouped by Year (appearing as row headers), Coal, Oil and Gas, calculated using percent units of measure (appearing as column headers).
Year Coal Oil Gas
percent
1870 56.39 43.61 0.00
1871 57.96 42.04 0.00
1872 64.09 35.91 0.00
1873 72.77 27.23 0.00
1874 82.95 17.05 0.00
1875 78.55 21.45 0.00
1876 65.03 34.97 0.00
1877 66.29 33.71 0.00
1878 76.96 23.04 0.00
1879 73.97 26.03 0.00
1880 82.55 17.45 0.00
1881 82.18 17.82 0.00
1882 85.61 14.39 0.00
1883 79.55 20.45 0.00
1884 82.22 17.78 0.00
1885 80.56 19.44 0.00
1886 83.47 16.53 0.00
1887 85.05 14.95 0.00
1888 82.57 17.43 0.00
1889 84.41 15.59 0.00
1890 82.89 17.11 0.00
1891 83.42 16.58 0.00
1892 82.39 17.61 0.00
1893 85.91 14.09 0.00
1894 86.57 13.43 0.00
1895 81.77 18.23 0.00
1896 81.90 18.10 0.00
1897 83.94 16.06 0.00
1898 84.87 15.13 0.00
1899 86.10 13.90 0.00
1900 89.64 10.36 0.00
1901 90.11 9.89 0.00
1902 92.05 7.95 0.00
1903 91.65 8.35 0.00
1904 92.78 7.22 0.00
1905 93.67 6.33 0.00
1906 94.93 5.07 0.00
1907 94.34 5.66 0.00
1908 96.05 3.95 0.00
1909 96.97 3.03 0.00
1910 98.29 1.71 0.00
1911 98.17 1.83 0.00
1912 98.69 1.31 0.00
1913 98.52 1.48 0.00
1914 98.60 1.40 0.00
1915 98.71 1.29 0.00
1916 98.61 1.39 0.00
1917 98.28 1.72 0.00
1918 97.80 2.20 0.00
1919 89.28 1.65 9.07
1920 92.32 1.28 6.40
1921 91.06 1.13 7.82
1922 88.71 1.16 10.13
1923 89.19 0.91 9.90
1924 85.39 1.14 13.48
1925 81.70 2.91 15.40
1926 83.26 2.54 14.20
1927 82.64 2.82 14.54
1928 81.48 3.63 14.90
1929 77.11 6.37 16.52
1930 71.57 9.53 18.90
1931 69.42 9.93 20.65
1932 69.40 7.94 22.66
1933 69.34 8.30 22.36
1934 68.06 9.22 22.72
1935 70.28 8.25 21.47
1936 68.17 7.86 23.97
1937 65.99 10.98 23.03
1938 62.77 16.79 20.45
1939 58.47 18.60 22.92
1940 59.00 19.25 21.75
1941 59.06 22.10 18.84
1942 58.76 22.81 18.43
1943 62.25 21.27 16.48
1944 65.38 20.15 14.47
1945 66.98 17.60 15.42
1946 66.78 18.59 14.63
1947 62.77 22.35 14.88
1948 60.89 27.83 11.28
1949 53.38 39.36 7.26
1950 47.59 48.81 3.60
1951 39.82 56.80 3.38
1952 35.44 60.64 3.91
1953 26.64 69.69 3.67
1954 19.00 77.79 3.21
1955 17.90 78.35 3.75
1956 14.10 82.58 3.32
1957 12.14 84.09 3.77
1958 11.90 81.73 6.37
1959 10.45 82.08 7.47
1960 10.29 80.12 9.59
1961 8.19 81.14 10.66
1962 6.45 80.90 12.65
1963 6.04 80.12 13.85
1964 5.52 79.87 14.61
1965 4.88 80.08 15.04
1966 4.64 80.06 15.31
1967 4.89 79.53 15.59
1968 4.49 79.20 16.32
1969 4.03 78.64 17.33
1970 5.50 76.69 17.81
1971 6.34 77.18 16.49
1972 6.60 77.07 16.33
1973 5.75 80.62 13.62
1974 5.89 80.62 13.49
1975 8.92 67.06 24.02
1976 7.97 60.35 31.69
1977 7.34 58.51 34.15
1978 7.04 59.66 33.30
1979 6.32 59.92 33.76
1980 5.51 58.79 35.69
1981 5.98 59.29 34.73
1982 5.89 63.19 30.92
1983 4.92 69.40 25.68
1984 6.13 68.10 25.77
1985 5.99 67.82 26.18
1986 8.44 59.86 31.71
1987 7.83 66.08 26.09
1988 9.68 57.08 33.25
1989 8.84 62.42 28.75
1990 8.41 65.32 26.27
1991 9.36 61.85 28.79
1992 7.44 63.00 29.56
1993 7.65 56.12 36.24
1994 6.58 54.79 38.63
1995 7.55 63.81 28.65
1996 6.54 64.11 29.34
1997 6.58 58.35 35.07
1998 7.15 51.13 41.72
1999 4.16 55.27 40.57
2000 2.47 51.82 45.70
2001 2.84 42.40 54.76
2002 2.96 54.91 42.13
2003 1.70 48.92 49.39
2004 1.88 53.32 44.79
2005 2.71 50.75 46.54
2006 2.55 58.54 38.91
2007 2.21 61.19 36.59
2008 3.29 65.82 30.89
2009 4.68 71.89 23.42
2010 5.01 76.07 18.93
2011 6.05 79.62 14.32
2012 4.88 85.32 9.79
2013 3.57 84.37 12.06
2014 2.60 82.79 14.61
2015 4.70 78.82 16.47

#### 4.2.2 Metals and minerals

Production shares for commodities in the long-run BCPI commodity bundle evolve over time as production starts or stops, and as data sources become available. Data for metals and minerals begin in 1886 with gold and copper, and expand to include silver, lead and iron in 1887 (Chart 3). Nickel enters the index in 1890, zinc in 1903, aluminum in 1905 and potash in 1967. Iron ore exits the index due to production cessation in 1900 and 1924, and re-enters the index in 1907 and 1940.

Production shares for metals and minerals exhibit features similar to those of production shares for agricultural commodities. There is an expansion through time in the number of commodities that affects the relative importance of each particular commodity. This occurs as new technologies, infrastructure, mineral discoveries and shifts in demand lead to changes in the composition of production. For example, transforming bauxite into aluminum requires significant quantities of electricity. As a result, the production share of aluminum increases as power sources become available to production.

Production changes affect relative shares, as in gold production, for example. Gold production constitutes a high proportion of overall production in the early part of the period. In the 1886-to-1890 period, this is the case partly because there is data on fewer commodities, but also because the Fraser River Gold Rush increased production. A similar event occurred in the late 1890s and early 1900s, as the Klondike Gold Rush drew people to the gold fields of Yukon. In the 1930s, the decision by the U.S. Federal Reserve to revalue gold from US$20.67 to US$35.00 per ounce led to a gold boom in Canada, and the share of gold production rose accordingly.

Through the period of stability in the 1950s and 1960s covered by the Bretton Woods period, gold production as a share of minerals and metals production declined to its lowest point. This period imposed price controls and trade restrictions on gold, and its cessation in the 1970s led to rapidly rising gold prices. This change is reflected in a rising share of gold in metals and minerals production, while the period of weak prices through the 1990s sees a relative decline. The share of gold production then rises through the 2000s as gold prices once again increased sharply.

Data table for Chart 3
Data table for Chart 3
Table summary
This table displays the results of Data table for Chart 3. The information is grouped by Year (appearing as row headers), Gold, Silver, Nickel, Copper , Aluminum, Zinc, Lead, Iron and Potash, calculated using percent units of measure (appearing as column headers).
Year Gold Silver Nickel Copper Aluminum Zinc Lead Iron Potash
percent
1870 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1871 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1872 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1873 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1874 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1875 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1876 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1877 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1878 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1879 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1880 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1881 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1882 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1883 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1884 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1885 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1886 78.33 0.00 0.00 21.67 0.00 0.00 0.00 0.00 0.00
1887 57.05 17.01 0.00 18.48 0.00 0.00 0.16 7.30 0.00
1888 41.32 15.77 0.00 36.54 0.00 0.00 0.42 5.95 0.00
1889 39.90 11.29 13.64 30.23 0.00 0.00 0.07 4.87 0.00
1890 32.27 12.00 23.28 27.87 0.00 0.00 0.05 4.53 0.00
1891 18.86 8.47 43.59 26.05 0.00 0.00 0.03 2.99 0.00
1892 25.35 7.75 34.76 23.98 0.00 0.00 0.34 7.82 0.00
1893 22.15 7.64 41.75 20.73 0.00 0.00 0.67 7.06 0.00
1894 25.57 12.34 37.67 17.50 0.00 0.00 1.58 5.35 0.00
1895 36.78 18.55 21.35 15.47 0.00 0.00 3.48 4.37 0.00
1896 36.51 29.08 14.01 14.20 0.00 0.00 3.55 2.65 0.00
1897 46.75 26.31 9.65 12.22 0.00 0.00 4.02 1.05 0.00
1898 65.95 12.67 7.75 10.72 0.00 0.00 2.14 0.76 0.00
1899 74.41 7.26 6.43 9.74 0.00 0.00 1.27 0.88 0.00
1900 73.63 7.38 7.81 8.48 0.00 0.00 2.70 0.00 0.00
1901 62.23 8.59 10.54 16.49 0.00 0.00 2.15 0.00 0.00
1902 64.33 6.89 13.47 14.26 0.00 0.01 1.05 0.00 0.00
1903 60.28 5.58 14.22 18.95 0.00 0.06 0.91 0.00 0.00
1904 54.10 7.81 14.03 20.81 0.96 0.03 2.25 0.00 0.00
1905 41.71 10.89 19.78 23.16 1.38 0.15 2.93 0.00 0.00
1906 29.49 14.81 20.40 28.82 2.12 0.02 2.94 1.39 0.00
1907 20.95 21.30 21.19 29.87 2.55 0.05 2.36 1.74 0.00
1908 24.89 30.16 18.51 22.31 0.93 0.00 1.70 1.50 0.00
1909 22.52 34.73 20.19 17.15 2.03 0.22 1.51 1.65 0.00
1910 21.40 37.62 20.85 15.60 2.24 0.09 0.95 1.25 0.00
1911 21.55 39.02 20.04 15.91 1.52 0.08 0.68 1.20 0.00
1912 20.79 32.61 19.66 21.92 3.03 0.13 0.97 0.89 0.00
1913 25.69 30.08 20.51 19.08 2.51 0.11 1.01 1.02 0.00
1914 27.42 27.30 20.83 18.53 3.74 0.17 1.04 0.97 0.00
1915 25.65 18.24 24.62 24.67 4.15 0.28 1.30 1.09 0.00
1916 18.59 16.49 24.95 32.29 4.63 1.07 1.27 0.72 0.00
1917 14.55 17.59 28.56 29.65 6.69 0.93 1.28 0.75 0.00
1918 13.12 19.16 29.85 27.83 6.64 0.96 1.60 0.84 0.00
1919 21.59 24.74 21.58 20.03 8.34 1.19 1.54 0.98 0.00
1920 20.92 18.16 28.85 19.76 8.52 1.50 1.58 0.71 0.00
1921 43.51 19.68 13.64 14.19 3.12 2.08 3.23 0.54 0.00
1922 46.72 22.96 9.80 10.76 3.65 2.14 3.86 0.11 0.00
1923 33.48 16.17 21.40 17.25 5.69 1.95 3.89 0.16 0.00
1924 35.13 14.99 19.29 15.89 6.23 2.59 5.88 0.00 0.00
1925 36.12 14.35 14.27 16.52 7.00 3.11 8.64 0.00 0.00
1926 35.81 14.00 12.62 18.11 8.34 4.07 7.05 0.00 0.00
1927 35.32 12.06 12.51 16.63 14.37 3.47 5.64 0.00 0.00
1928 30.88 10.29 15.68 23.70 11.91 2.98 4.56 0.00 0.00
1929 27.95 8.77 16.90 31.91 7.40 2.77 4.30 0.00 0.00
1930 31.90 7.56 15.96 29.21 9.18 2.63 3.57 0.00 0.00
1931 49.17 5.31 11.49 21.40 8.45 1.90 2.28 0.00 0.00
1932 65.66 5.45 5.86 14.73 5.04 1.41 1.84 0.00 0.00
1933 59.70 4.15 12.67 16.06 4.07 1.68 1.67 0.00 0.00
1934 57.28 4.42 15.96 15.62 3.08 1.88 1.75 0.00 0.00
1935 55.94 5.32 15.21 16.39 3.46 1.78 1.91 0.00 0.00
1936 54.68 3.52 16.25 17.25 4.28 1.71 2.32 0.00 0.00
1937 46.34 3.40 17.10 23.36 5.08 2.18 2.53 0.00 0.00
1938 52.54 3.12 15.15 18.74 7.43 1.38 1.64 0.00 0.00
1939 54.11 2.81 13.31 18.78 8.20 1.32 1.34 0.12 0.00
1940 52.81 2.40 13.74 17.81 9.96 1.39 1.52 0.38 0.00
1941 47.30 1.95 14.03 15.52 17.98 1.49 1.32 0.40 0.00
1942 41.47 1.98 13.85 14.09 25.14 1.63 1.42 0.41 0.00
1943 31.01 1.77 14.06 15.54 33.72 2.00 1.36 0.55 0.00
1944 28.12 1.49 15.37 17.09 33.87 2.20 1.27 0.58 0.00
1945 33.08 1.98 17.56 19.82 20.15 3.94 2.05 1.42 0.00
1946 36.97 3.80 14.33 17.37 16.57 4.85 3.15 2.96 0.00
1947 27.69 2.37 16.18 24.73 17.41 4.46 4.23 2.93 0.00
1948 26.37 2.63 16.49 23.99 18.61 5.17 4.78 1.95 0.00
1949 27.97 2.52 16.61 20.69 18.46 5.34 3.53 4.88 0.00
1950 27.90 3.16 16.45 21.33 17.50 6.01 2.93 4.73 0.00
1951 22.59 3.11 18.77 21.81 18.35 7.03 3.02 5.31 0.00
1952 20.91 2.93 18.36 20.98 21.85 6.57 2.77 5.63 0.00
1953 18.61 3.23 19.01 21.10 23.62 4.75 2.48 7.19 0.00
1954 18.10 3.22 19.49 22.42 22.69 4.07 2.63 7.39 0.00
1955 14.97 2.41 18.33 24.01 21.13 4.19 2.07 12.89 0.00
1956 12.56 2.16 16.43 25.55 21.31 3.87 1.81 16.30 0.00
1957 13.34 2.31 20.65 19.46 20.88 3.33 1.69 18.34 0.00
1958 15.61 2.77 17.34 18.38 25.37 3.45 1.58 15.49 0.00
1959 12.88 2.45 19.56 20.92 19.68 3.08 1.26 20.16 0.00
1960 12.02 2.36 20.10 21.24 23.57 3.08 1.25 16.37 0.00
1961 13.18 2.36 24.41 20.91 21.56 3.04 1.37 13.18 0.00
1962 11.72 3.74 23.66 18.97 21.10 2.93 1.12 16.77 0.00
1963 11.22 4.38 21.75 17.65 21.48 2.95 1.08 19.49 0.00
1964 9.16 3.65 21.02 18.45 22.22 4.14 1.17 20.18 0.00
1965 8.09 3.67 21.52 19.42 20.61 4.77 1.74 20.18 0.00
1966 7.05 3.37 18.22 21.80 20.24 5.23 1.61 19.33 3.15
1967 6.25 3.87 18.53 23.34 19.20 5.16 1.43 19.07 3.15
1968 6.05 5.47 19.05 21.77 18.72 4.80 1.34 19.96 2.83
1969 6.33 3.94 18.15 22.57 21.31 5.32 1.40 17.98 2.99
1970 4.39 3.46 24.30 22.65 17.51 4.87 1.50 17.48 3.83
1971 4.83 3.19 22.24 21.49 18.26 5.53 1.45 18.11 4.89
1972 6.03 3.77 23.28 20.75 16.95 6.42 1.53 16.05 5.23
1973 6.07 4.46 22.77 22.54 13.76 7.72 1.44 16.49 4.75
1974 6.70 5.34 19.40 23.68 14.94 7.09 1.10 15.28 6.46
1975 6.55 5.40 21.25 15.65 15.24 7.03 1.26 19.58 8.05
1976 5.22 5.41 21.84 16.00 12.28 7.82 1.23 23.36 6.83
1977 5.66 6.00 16.36 13.37 19.22 7.16 1.66 23.43 7.14
1978 9.43 6.95 10.24 13.58 23.08 6.94 2.20 19.70 7.89
1979 9.48 8.47 10.58 13.27 17.07 7.32 2.83 21.16 9.82
1980 19.47 9.07 11.73 12.03 16.59 5.28 1.68 14.62 9.54
1981 20.17 5.79 10.34 10.55 17.88 6.69 1.62 16.61 10.35
1982 22.79 5.65 7.35 9.27 20.45 7.40 1.41 16.95 8.73
1983 24.58 7.07 8.17 10.62 21.70 7.21 1.02 12.50 7.13
1984 25.41 5.39 9.44 9.01 21.24 8.42 1.10 11.46 8.53
1985 25.42 4.76 10.62 9.93 20.66 8.09 0.95 13.20 6.38
1986 34.67 4.22 7.65 8.94 21.84 5.02 0.95 11.41 5.29
1987 27.05 4.06 9.19 10.18 25.27 5.58 1.49 10.79 6.37
1988 20.75 3.73 15.31 10.82 25.78 6.55 1.03 8.36 7.67
1989 19.18 2.63 17.19 11.51 23.90 8.76 0.89 9.02 6.90
1990 22.40 3.01 14.25 12.49 22.11 8.15 1.00 9.31 7.27
1991 23.59 3.36 13.78 11.88 21.88 6.75 1.03 9.89 7.84
1992 22.87 2.11 12.33 12.31 24.22 7.70 1.07 9.10 8.29
1993 27.49 3.19 10.40 11.44 25.02 6.34 0.49 7.89 7.73
1994 22.95 2.90 8.67 13.37 28.31 6.75 0.64 7.92 8.49
1995 18.16 3.08 11.70 14.57 29.12 6.86 0.77 7.38 8.35
1996 21.97 3.17 11.99 11.68 26.91 6.92 1.08 8.65 7.63
1997 21.59 2.99 10.72 11.09 27.24 7.70 0.61 9.28 8.78
1998 20.67 4.12 8.70 9.30 29.44 6.33 0.49 10.32 10.62
1999 18.56 4.82 10.39 9.30 31.44 6.85 0.52 7.96 10.17
2000 15.76 4.21 13.15 9.34 33.52 6.04 0.37 8.58 9.03
2001 15.30 5.49 10.38 9.51 36.40 5.68 0.44 7.68 9.13
2002 17.59 4.74 11.31 8.56 36.68 4.52 0.29 7.06 9.25
2003 17.57 4.82 12.75 7.41 36.79 3.59 0.27 7.72 9.08
2004 17.08 6.01 15.92 8.96 31.72 3.37 0.28 6.50 10.16
2005 14.22 5.28 15.43 10.61 29.82 3.10 0.26 10.77 10.51
2006 12.08 3.65 20.91 13.46 28.82 5.04 0.27 8.57 7.20
2007 11.52 2.64 29.37 11.74 24.92 4.23 0.40 7.28 7.90
2008 12.35 2.26 15.94 10.48 26.01 2.68 0.45 9.59 20.25
2009 23.76 3.22 9.77 10.59 23.20 3.80 0.42 10.67 14.58
2010 21.16 2.77 11.48 11.19 18.65 3.02 0.31 16.24 15.18
2011 20.67 3.81 12.46 10.91 16.86 2.27 0.29 14.10 18.63
2012 25.55 4.20 10.17 11.08 15.51 2.29 0.25 13.76 17.20
2013 27.65 3.14 9.73 11.75 15.16 1.59 0.10 15.17 15.73
2014 31.40 2.54 11.21 11.61 14.90 1.46 0.02 15.13 11.73
2015 32.16 2.34 8.76 10.41 14.83 1.45 0.02 16.67 13.37

#### 4.2.3 Forestry

Across forestry commodities in the long-run BCPI, the largest source of adjustment comes from the emergence and evolution of publishing industries and their demand for newsprint and pulp and paper (Chart 4). Beginning around the end of the First World War and stabilizing by the late 1930s, a transition in the composition of production away from lumber towards pulp and paper and newsprint occurred. The production of newsprint and pulp and paper was the majority of production of forestry products until the 1990s, when the relative share of lumber began to rise, and the share of newsprint began to decline quickly.

Data table for Chart 4
Data table for Chart 4
Table summary
This table displays the results of Data table for Chart 4. The information is grouped by Year (appearing as row headers), Lumber, Newsprint and Pulp, calculated using percent units of measure (appearing as column headers).
Year Lumber Newsprint Pulp
percent
1870 100.00 0.00 0.00
1871 100.00 0.00 0.00
1872 100.00 0.00 0.00
1873 100.00 0.00 0.00
1874 100.00 0.00 0.00
1875 100.00 0.00 0.00
1876 100.00 0.00 0.00
1877 100.00 0.00 0.00
1878 100.00 0.00 0.00
1879 100.00 0.00 0.00
1880 99.75 0.00 0.25
1881 99.49 0.00 0.51
1882 99.34 0.00 0.66
1883 99.18 0.00 0.82
1884 98.80 0.00 1.20
1885 98.36 0.00 1.64
1886 98.12 0.00 1.88
1887 97.87 0.00 2.13
1888 97.66 0.00 2.34
1889 97.41 0.00 2.59
1890 91.64 5.85 2.51
1891 90.74 6.12 3.14
1892 88.19 7.59 4.22
1893 87.37 7.95 4.68
1894 86.01 8.91 5.09
1895 84.05 9.95 6.00
1896 85.18 9.08 5.74
1897 83.78 9.24 6.98
1898 81.66 9.94 8.40
1899 82.00 9.41 8.58
1900 82.11 9.24 8.65
1901 81.89 9.32 8.80
1902 81.14 9.63 9.23
1903 82.02 9.54 8.44
1904 80.95 10.54 8.52
1905 80.74 10.77 8.48
1906 78.53 12.49 8.98
1907 82.13 10.74 7.13
1908 80.24 11.95 7.81
1909 80.03 11.86 8.11
1910 80.03 11.58 8.39
1911 82.69 10.36 6.95
1912 77.12 14.29 8.59
1913 77.77 13.14 9.09
1914 69.80 16.87 13.32
1915 67.99 18.77 13.24
1916 54.04 25.09 20.87
1917 53.43 24.83 21.74
1918 56.55 25.21 18.24
1919 56.88 25.37 17.76
1920 52.13 25.07 22.80
1921 40.83 39.01 20.16
1922 41.31 37.12 21.57
1923 42.81 36.85 20.35
1924 41.50 39.85 18.65
1925 38.64 41.18 20.18
1926 35.84 42.93 21.22
1927 33.71 45.73 20.56
1928 33.34 46.39 20.27
1929 34.22 45.53 20.24
1930 31.07 48.24 20.68
1931 22.82 55.31 21.87
1932 18.43 58.63 22.94
1933 21.65 52.32 26.03
1934 24.31 52.09 23.61
1935 26.95 49.75 23.30
1936 28.80 48.90 22.30
1937 30.67 46.85 22.48
1938 32.23 47.50 20.27
1939 31.37 48.41 20.22
1940 31.00 46.35 22.65
1941 34.08 41.89 24.03
1942 37.77 37.07 25.16
1943 37.42 37.68 24.90
1944 38.22 37.17 24.61
1945 36.91 38.53 24.56
1946 34.85 42.52 22.63
1947 36.29 40.06 23.65
1948 34.24 40.39 25.37
1949 32.38 45.26 22.37
1950 35.48 42.58 21.93
1951 35.00 38.91 26.08
1952 33.99 42.25 23.76
1953 34.04 43.61 22.35
1954 32.60 44.39 23.01
1955 34.06 43.29 22.66
1956 32.84 44.80 22.35
1957 29.84 46.67 23.49
1958 30.15 45.89 23.96
1959 30.50 45.42 24.07
1960 30.18 46.16 23.66
1961 31.86 45.59 22.54
1962 33.58 43.05 23.36
1963 34.90 40.87 24.22
1964 34.92 40.35 24.73
1965 34.24 40.31 25.45
1966 32.90 41.70 25.39
1967 33.60 40.43 25.97
1968 37.24 36.59 26.17
1969 35.74 36.69 27.57
1970 32.86 37.14 30.00
1971 38.06 34.36 27.59
1972 44.82 29.90 25.28
1973 48.26 26.47 25.27
1974 33.52 30.50 35.98
1975 30.66 33.38 35.96
1976 35.61 31.66 32.73
1977 40.36 31.65 27.99
1978 43.73 31.10 25.16
1979 43.92 28.49 27.59
1980 35.73 30.94 33.33
1981 31.54 35.45 33.01
1982 30.25 37.52 32.23
1983 39.80 32.67 27.53
1984 36.29 33.82 29.89
1985 38.44 34.49 27.07
1986 38.18 33.53 28.29
1987 38.17 29.90 31.94
1988 35.56 29.55 34.90
1989 35.28 26.88 37.84
1990 36.80 26.67 36.53
1991 38.64 28.13 33.23
1992 44.86 24.58 30.57
1993 53.41 22.88 23.70
1994 53.03 20.71 26.26
1995 39.50 24.68 35.82
1996 48.13 25.60 26.27
1997 52.47 22.17 25.36
1998 51.82 23.22 24.96
1999 53.97 20.89 25.13
2000 47.80 21.25 30.95
2001 49.41 23.99 26.60
2002 53.37 20.50 26.13
2003 50.82 20.48 28.70
2004 53.86 19.12 27.02
2005 54.41 20.70 24.89
2006 54.13 19.52 26.36
2007 49.07 18.41 32.52
2008 45.80 20.38 33.81
2009 40.67 18.94 40.39
2010 40.34 17.80 41.86
2011 40.38 16.37 43.25
2012 48.18 15.39 36.43
2013 52.47 13.05 34.48
2014 49.61 12.68 37.71
2015 45.58 13.32 41.10

#### 4.2.4 Agriculture

The agricultural commodities included in the long-run BCPI are a select number of agricultural outputs that have particular economic significance (Chart 5). Nevertheless, the major events that affected agricultural production over the last 145 years are encapsulated in the commodities included here. Events such as the Wheat Boom of the late 1800’s and early 1900’s or the increasing importance of oilseeds (represented by canola) can be seen in the share of agricultural commodities included in the historical index. Similarly, the importance of animal production, which typically makes up nearly 40% of the weight in the BCPI for agriculture, can be seen.

While particular products, such as wheat or cattle, have an important place in agriculture over the entire time period, their relative size is not fixed. While year-to-year fluctuations in prices or production can lead to changes in the share of a particular commodity, a more important change has been the evolution that agriculture has undergone in Canada. In response to new developments, from infrastructure that opened the Prairies to research and development that made new crop types available, agricultural production moved first towards wheat and later towards oilseeds.

Data table for Chart 5
Data table for Chart 5
Table summary
This table displays the results of Data table for Chart 5. The information is grouped by Year (appearing as row headers), Cattle, Hogs, Wheat, Barley, Potatoes, Corn and Canola, calculated using percent units of measure (appearing as column headers).
Year Cattle Hogs Wheat Barley Potatoes Corn Canola
percent
1870 31.93 21.51 10.32 24.55 11.68 0.00 0.00
1871 27.48 14.94 16.48 25.83 15.27 0.00 0.00
1872 30.41 16.14 18.13 24.45 10.87 0.00 0.00
1873 20.80 16.05 17.97 35.52 9.66 0.00 0.00
1874 20.80 16.22 13.54 37.95 11.49 0.00 0.00
1875 16.17 15.85 13.70 47.25 7.03 0.00 0.00
1876 20.79 19.39 14.20 35.04 10.57 0.00 0.00
1877 21.88 15.29 19.62 30.70 12.52 0.00 0.00
1878 21.01 11.67 16.84 33.10 17.38 0.00 0.00
1879 20.28 13.32 19.67 31.18 15.55 0.00 0.00
1880 19.22 13.23 18.33 43.22 5.99 0.00 0.00
1881 12.23 13.30 16.46 45.00 13.00 0.00 0.00
1882 23.52 14.31 21.01 30.07 11.09 0.00 0.00
1883 26.43 14.46 15.11 29.86 14.14 0.00 0.00
1884 26.76 14.05 20.85 29.81 8.53 0.00 0.00
1885 23.36 13.68 18.36 31.60 13.00 0.00 0.00
1886 20.71 15.76 16.50 34.23 12.81 0.00 0.00
1887 19.18 15.36 14.55 33.89 17.02 0.00 0.00
1888 20.56 17.15 14.55 39.04 8.70 0.00 0.00
1889 21.03 19.01 15.39 29.53 15.04 0.00 0.00
1890 27.62 17.03 19.08 20.77 15.50 0.00 0.00
1891 28.13 10.90 29.96 19.99 11.02 0.00 0.00
1892 23.49 22.65 26.03 11.65 16.18 0.00 0.00
1893 36.66 16.77 21.46 6.58 18.54 0.00 0.00
1894 27.75 29.31 17.30 9.19 16.44 0.00 0.00
1895 30.62 23.44 29.98 7.64 8.32 0.00 0.00
1896 31.62 25.33 20.73 9.22 13.10 0.00 0.00
1897 30.49 22.96 26.77 3.57 16.21 0.00 0.00
1898 27.65 22.93 31.34 4.40 13.69 0.00 0.00
1899 31.95 22.35 23.11 9.68 12.90 0.00 0.00
1900 35.05 23.28 23.29 10.69 7.69 0.00 0.00
1901 30.02 25.67 27.48 5.75 11.08 0.00 0.00
1902 31.03 26.31 24.96 4.99 12.71 0.00 0.00
1903 28.03 24.95 22.74 5.27 19.00 0.00 0.00
1904 29.59 26.08 24.23 6.04 14.06 0.00 0.00
1905 29.28 24.85 29.29 5.57 11.02 0.00 0.00
1906 22.00 26.84 33.28 5.10 12.78 0.00 0.00
1907 22.20 21.74 30.72 8.95 16.39 0.00 0.00
1908 18.93 21.37 37.11 8.81 13.79 0.00 0.00
1909 17.53 20.50 38.67 7.92 10.92 4.45 0.00
1910 20.15 29.06 32.98 5.22 9.51 3.08 0.00
1911 19.42 19.17 41.93 6.17 10.00 3.31 0.00
1912 22.26 21.19 38.37 5.85 9.28 3.06 0.00
1913 22.42 24.43 36.56 4.82 8.90 2.87 0.00
1914 24.82 22.15 36.23 4.92 9.23 2.66 0.00
1915 19.20 16.41 52.40 4.51 5.59 1.90 0.00
1916 19.99 17.00 51.14 4.57 6.31 0.98 0.00
1917 19.32 20.32 42.99 6.79 8.79 1.79 0.00
1918 21.72 22.38 33.80 8.41 10.66 3.03 0.00
1919 21.56 21.52 33.98 7.57 12.58 2.79 0.00
1920 16.86 17.36 43.44 5.90 14.05 2.38 0.00
1921 15.37 13.25 49.75 4.97 13.70 2.95 0.00
1922 13.32 17.84 53.16 5.39 7.92 2.38 0.00
1923 11.55 15.48 57.41 4.91 8.35 2.30 0.00
1924 12.43 18.52 49.82 9.51 7.08 2.65 0.00
1925 10.99 16.86 55.00 5.70 9.97 1.48 0.00
1926 10.66 17.54 55.47 6.63 8.44 1.26 0.00
1927 11.58 14.72 59.66 7.33 6.04 0.67 0.00
1928 13.10 14.95 58.01 8.68 4.41 0.85 0.00
1929 18.23 21.07 41.44 9.05 9.15 1.06 0.00
1930 19.39 24.46 41.26 5.51 7.96 1.40 0.00
1931 18.40 22.71 45.27 5.65 6.89 1.08 0.00
1932 16.01 14.60 54.96 6.02 7.45 0.96 0.00
1933 16.80 22.52 43.63 5.98 9.84 1.23 0.00
1934 14.72 21.96 46.61 8.58 6.43 1.70 0.00
1935 17.03 23.21 44.89 6.06 7.55 1.25 0.00
1936 14.94 20.90 42.78 10.86 9.39 1.13 0.00
1937 18.06 24.52 40.63 9.72 5.98 1.09 0.00
1938 18.92 24.44 40.44 7.14 7.84 1.22 0.00
1939 15.73 21.48 49.14 6.04 6.63 0.99 0.00
1940 16.86 24.20 47.17 5.48 5.46 0.82 0.00
1941 17.38 24.27 36.80 9.99 9.23 2.32 0.00
1942 12.60 18.56 46.29 14.05 6.93 1.57 0.00
1943 18.95 28.88 28.45 15.16 7.64 0.93 0.00
1944 16.73 25.34 36.67 13.75 6.22 1.28 0.00
1945 21.26 24.30 33.51 11.59 7.91 1.42 0.00
1946 18.91 20.22 41.63 11.13 6.79 1.31 0.00
1947 19.10 22.92 35.49 13.99 7.19 1.31 0.00
1948 19.27 19.70 43.32 11.01 5.27 1.43 0.00
1949 20.51 23.13 39.43 10.99 4.40 1.48 0.06
1950 21.51 19.93 41.61 12.05 3.31 1.59 0.00
1951 24.81 19.03 36.87 13.13 4.68 1.47 0.01
1952 21.75 14.34 43.67 14.19 4.55 1.48 0.02
1953 22.44 14.09 46.18 11.86 2.81 2.57 0.05
1954 26.26 23.99 29.77 11.04 5.29 3.58 0.07
1955 23.98 16.64 39.05 12.88 4.02 3.28 0.16
1956 23.76 14.41 41.66 12.42 4.20 2.93 0.62
1957 28.34 21.42 30.52 10.73 4.74 3.36 0.90
1958 30.39 24.84 27.31 10.19 3.68 3.04 0.54
1959 32.94 19.85 29.82 8.78 5.19 3.01 0.39
1960 32.39 15.16 35.54 8.69 4.55 2.65 1.01
1961 39.90 19.20 24.86 7.41 3.74 3.63 1.27
1962 33.43 14.83 37.18 7.38 3.35 3.26 0.57
1963 28.15 13.05 43.13 8.50 3.12 3.19 0.86
1964 28.68 13.33 39.96 6.92 5.39 4.23 1.49
1965 30.03 13.86 36.29 8.75 4.45 4.49 2.13
1966 27.14 13.79 40.29 9.84 2.40 4.52 2.03
1967 33.74 15.53 32.55 8.22 2.88 5.29 1.79
1968 33.46 14.41 32.58 9.66 2.90 5.68 1.31
1969 33.88 16.68 29.37 8.55 3.62 5.28 2.62
1970 38.84 18.83 13.22 11.42 3.86 7.61 6.23
1971 35.89 13.27 21.96 13.24 2.53 6.61 6.50
1972 36.92 14.49 16.56 16.86 3.76 6.60 4.80
1973 31.77 13.56 18.23 19.89 4.08 7.27 5.22
1974 29.37 11.06 31.35 13.36 2.09 7.33 5.45
1975 24.85 11.57 33.23 13.59 3.10 8.10 5.56
1976 23.31 11.74 39.07 12.52 2.62 7.73 3.02
1977 27.27 12.86 27.63 13.00 2.33 8.76 8.15
1978 30.72 14.60 23.40 9.55 2.06 8.42 11.25
1979 34.91 14.05 22.21 8.99 1.63 9.06 9.16
1980 29.74 11.55 27.45 13.14 2.92 9.50 5.71
1981 26.45 12.22 34.48 12.67 2.10 8.14 3.93
1982 24.99 14.93 35.33 10.45 1.87 7.76 4.67
1983 24.99 13.66 32.38 9.56 2.67 9.09 7.66
1984 26.18 14.80 27.83 10.05 2.31 9.45 9.37
1985 25.99 13.98 30.61 11.46 1.82 8.16 7.98
1986 26.78 16.98 29.87 11.31 3.04 5.89 6.14
1987 34.31 19.39 20.30 9.65 2.99 7.00 6.35
1988 34.78 15.03 22.93 8.16 3.50 5.82 9.79
1989 32.37 13.62 28.42 9.34 3.67 6.25 6.32
1990 31.03 14.98 30.11 8.79 3.04 6.03 6.03
1991 35.26 15.91 24.70 7.07 3.35 5.69 8.01
1992 38.25 15.02 24.20 6.91 3.27 4.61 7.74
1993 38.24 14.48 21.69 6.47 4.04 4.66 10.42
1994 35.75 13.84 19.41 6.23 4.00 4.96 15.81
1995 30.57 13.55 26.57 8.12 3.63 4.96 12.59
1996 24.53 14.72 31.77 10.55 2.85 6.51 9.07
1997 29.91 17.88 22.45 8.34 3.89 5.14 12.38
1998 32.30 13.32 21.89 7.53 4.43 5.52 15.00
1999 35.53 13.95 21.26 7.18 4.32 4.83 12.91
2000 40.10 18.58 18.21 6.89 4.00 3.74 8.49
2001 40.79 20.13 16.85 6.23 5.03 4.41 6.56
2002 40.39 18.69 16.63 5.20 5.63 5.62 7.84
2003 31.10 19.18 18.89 8.49 5.02 5.95 11.37
2004 28.24 22.99 19.54 7.16 4.56 5.39 12.14
2005 33.78 21.86 15.91 6.23 5.36 4.40 12.47
2006 34.48 19.27 17.11 5.46 5.42 5.45 12.82
2007 30.52 15.30 19.98 7.35 4.71 6.40 15.75
2008 21.52 11.28 28.51 7.13 4.49 5.90 21.16
2009 26.23 13.03 21.61 4.72 4.96 6.34 23.09
2010 26.77 15.50 17.98 4.24 4.43 7.50 23.57
2011 22.07 13.98 19.81 4.42 3.56 9.28 26.87
2012 23.97 12.86 18.07 5.27 2.77 10.47 26.59
2013 22.53 12.48 17.00 5.96 3.45 9.16 29.43
2014 34.69 15.81 16.65 3.13 3.10 5.73 20.88
2015 39.70 12.06 14.72 3.51 3.09 5.81 21.11

### 4.3 Examining the utility of the long-run Bank of Canada commodity price index: 1870 to 2015

The historical chain index values that have been linked to the modern BCPI are shown in Chart 6, and the accompanying compound annual growth rates by decade are reported in Table 7. To examine the utility of the index calculations, two approaches are taken. In both approaches, the goal is to understand the characteristics of the long-run BCPI, to identify the types of uses it is most appropriate for.

The first approach examines the behaviour of the historical BCPI values with respect to major economic events.

The second approach compares the long-run BCPI values with two other indexes: an export index for Canada from 1870 to the present that is an updated version of the index from Baldwin and Macdonald (2012), and the General Wholesale Price Index (including gold) for the period from 1870 to 1975 from the Historical Statistics of Canada (Holmes n.d.). This comparison is performed only at an aggregate level, as experience has shown that this level has the greatest consistency when making comparisons across indexes or between values from different time periods and methodologies.

Data table for Chart 6
Data table for Chart 6
Table summary
This table displays the results of Data table for Chart 6. The information is grouped by Year (appearing as row headers), Total, all commodities, Energy, Metals and minerals, Agriculture, Forestry and Fish, calculated using log of index (1972=100) units of measure (appearing as column headers).
Year Total, all commodities Energy Metals and minerals Agriculture Forestry Fish
log of index (1972=100)
1870 3.52 3.40 Note ...: not applicable 3.80 2.50 Note ...: not applicable
1871 3.39 3.45 Note ...: not applicable 3.64 2.52 Note ...: not applicable
1872 3.35 3.36 Note ...: not applicable 3.59 2.54 Note ...: not applicable
1873 3.42 3.16 Note ...: not applicable 3.68 2.56 Note ...: not applicable
1874 3.41 2.99 Note ...: not applicable 3.68 2.52 Note ...: not applicable
1875 3.35 2.97 Note ...: not applicable 3.63 2.43 Note ...: not applicable
1876 3.29 3.06 Note ...: not applicable 3.56 2.37 Note ...: not applicable
1877 3.19 2.89 Note ...: not applicable 3.46 2.32 Note ...: not applicable
1878 3.07 2.61 Note ...: not applicable 3.33 2.23 Note ...: not applicable
1879 3.08 2.51 Note ...: not applicable 3.35 2.25 Note ...: not applicable
1880 3.20 2.73 Note ...: not applicable 3.47 2.32 Note ...: not applicable
1881 3.37 2.99 Note ...: not applicable 3.65 2.38 Note ...: not applicable
1882 3.23 2.96 Note ...: not applicable 3.48 2.43 Note ...: not applicable
1883 3.18 3.02 Note ...: not applicable 3.42 2.40 Note ...: not applicable
1884 3.07 2.87 Note ...: not applicable 3.30 2.40 Note ...: not applicable
1885 3.07 2.97 Note ...: not applicable 3.31 2.35 Note ...: not applicable
1886 3.03 2.91 3.85 3.25 2.37 Note ...: not applicable
1887 3.09 2.93 3.85 3.32 2.38 Note ...: not applicable
1888 3.12 2.88 3.97 3.36 2.37 Note ...: not applicable
1889 2.92 2.68 3.92 3.12 2.37 Note ...: not applicable
1890 3.11 2.67 3.97 3.36 2.37 Note ...: not applicable
1891 3.02 2.63 3.85 3.25 2.35 Note ...: not applicable
1892 3.00 2.68 3.93 3.23 2.32 Note ...: not applicable
1893 3.02 2.71 3.76 3.25 2.33 Note ...: not applicable
1894 2.93 2.69 3.74 3.14 2.32 Note ...: not applicable
1895 2.84 2.70 3.57 3.03 2.28 Note ...: not applicable
1896 2.86 2.73 3.59 3.05 2.27 Note ...: not applicable
1897 2.97 2.68 3.58 3.22 2.26 Note ...: not applicable
1898 2.89 2.64 3.58 3.11 2.29 Note ...: not applicable
1899 2.93 2.72 3.63 3.13 2.36 Note ...: not applicable
1900 3.00 2.75 3.65 3.22 2.39 Note ...: not applicable
1901 3.06 2.83 3.67 3.32 2.35 Note ...: not applicable
1902 3.06 2.90 3.57 3.31 2.49 Note ...: not applicable
1903 3.07 3.01 3.58 3.32 2.47 Note ...: not applicable
1904 3.01 2.94 3.58 3.26 2.38 Note ...: not applicable
1905 3.04 2.88 3.63 3.27 2.50 Note ...: not applicable
1906 3.06 2.90 3.71 3.26 2.62 Note ...: not applicable
1907 3.18 2.93 3.74 3.41 2.70 Note ...: not applicable
1908 3.21 2.92 3.57 3.43 2.87 Note ...: not applicable
1909 3.25 2.89 3.53 3.49 2.90 Note ...: not applicable
1910 3.23 2.92 3.54 3.47 2.86 Note ...: not applicable
1911 3.28 2.94 3.53 3.52 2.95 Note ...: not applicable
1912 3.24 3.03 3.63 3.45 2.97 Note ...: not applicable
1913 3.31 3.04 3.61 3.52 3.06 Note ...: not applicable
1914 3.35 3.01 3.56 3.60 3.03 Note ...: not applicable
1915 3.32 3.00 3.62 3.53 3.12 Note ...: not applicable
1916 3.60 3.12 3.83 3.87 3.12 Note ...: not applicable
1917 3.90 3.33 3.86 4.22 3.32 Note ...: not applicable
1918 3.95 3.51 3.82 4.26 3.43 Note ...: not applicable
1919 4.05 3.70 3.75 4.36 3.57 Note ...: not applicable
1920 3.93 3.86 3.76 4.11 3.81 Note ...: not applicable
1921 3.57 3.89 3.56 3.65 3.63 Note ...: not applicable
1922 3.50 3.90 3.58 3.58 3.46 Note ...: not applicable
1923 3.50 3.96 3.60 3.57 3.49 Note ...: not applicable
1924 3.62 3.95 3.56 3.74 3.55 Note ...: not applicable
1925 3.77 3.93 3.60 3.95 3.62 Note ...: not applicable
1926 3.69 3.99 3.59 3.84 3.57 Note ...: not applicable
1927 3.66 3.96 3.54 3.81 3.54 Note ...: not applicable
1928 3.54 3.90 3.56 3.65 3.47 Note ...: not applicable
1929 3.63 3.89 3.61 3.77 3.51 Note ...: not applicable
1930 3.42 3.86 3.46 3.48 3.41 Note ...: not applicable
1931 3.13 3.76 3.32 3.01 3.29 Note ...: not applicable
1932 2.97 3.70 3.24 2.82 3.13 Note ...: not applicable
1933 3.17 3.62 3.29 3.24 2.96 Note ...: not applicable
1934 3.31 3.67 3.64 3.34 2.99 Note ...: not applicable
1935 3.41 3.62 3.65 3.53 2.99 Note ...: not applicable
1936 3.52 3.63 3.66 3.75 3.02 Note ...: not applicable
1937 3.51 3.57 3.74 3.66 3.07 Note ...: not applicable
1938 3.37 3.57 3.67 3.35 3.11 Note ...: not applicable
1939 3.41 3.51 3.69 3.43 3.12 Note ...: not applicable
1940 3.39 3.54 3.68 3.38 3.12 Note ...: not applicable
1941 3.55 3.62 3.68 3.73 3.20 Note ...: not applicable
1942 3.67 3.67 3.66 3.95 3.31 Note ...: not applicable
1943 3.81 3.75 3.66 4.14 3.51 Note ...: not applicable
1944 3.82 3.81 3.66 4.13 3.55 Note ...: not applicable
1945 3.85 3.84 3.67 4.19 3.56 Note ...: not applicable
1946 4.05 3.97 3.72 4.39 3.81 Note ...: not applicable
1947 4.26 4.09 3.84 4.63 4.03 3.36
1948 4.25 4.25 3.89 4.54 4.08 3.44
1949 4.19 4.26 3.88 4.42 4.07 3.39
1950 4.24 4.29 3.94 4.49 4.09 3.52
1951 4.34 4.32 4.04 4.61 4.17 3.53
1952 4.34 4.32 4.06 4.56 4.23 3.56
1953 4.29 4.37 4.10 4.44 4.24 3.48
1954 4.31 4.37 4.12 4.46 4.24 3.56
1955 4.29 4.36 4.22 4.32 4.27 3.49
1956 4.31 4.37 4.26 4.32 4.30 3.58
1957 4.32 4.47 4.22 4.37 4.29 3.62
1958 4.33 4.45 4.19 4.41 4.29 3.79
1959 4.33 4.42 4.23 4.37 4.30 3.84
1960 4.32 4.41 4.25 4.34 4.32 3.85
1961 4.33 4.43 4.25 4.36 4.30 3.83
1962 4.34 4.43 4.25 4.40 4.30 3.95
1963 4.32 4.44 4.25 4.34 4.30 3.92
1964 4.29 4.43 4.28 4.23 4.31 3.88
1965 4.31 4.42 4.31 4.28 4.33 3.94
1966 4.37 4.43 4.31 4.40 4.35 3.99
1967 4.35 4.44 4.35 4.30 4.36 3.98
1968 4.37 4.46 4.41 4.27 4.40 4.06
1969 4.43 4.50 4.47 4.34 4.46 4.27
1970 4.47 4.54 4.58 4.39 4.43 4.39
1971 4.49 4.60 4.57 4.36 4.52 4.38
1972 4.61 4.61 4.61 4.61 4.61 4.61
1973 4.87 4.71 4.89 5.03 4.79 4.79
1974 5.13 5.21 5.20 5.21 4.92 4.84
1975 5.16 5.50 5.06 5.08 5.03 4.85
1976 5.18 5.65 5.10 4.98 5.02 5.16
1977 5.18 5.73 5.13 4.84 5.08 5.30
1978 5.27 5.83 5.19 4.94 5.15 5.41
1979 5.45 6.01 5.51 5.08 5.27 5.55
1980 5.63 6.44 5.74 5.15 5.25 5.44
1981 5.69 6.69 5.57 5.18 5.27 5.48
1982 5.62 6.65 5.40 5.11 5.22 5.54
1983 5.62 6.59 5.53 5.12 5.25 5.49
1984 5.59 6.55 5.45 5.15 5.24 5.67
1985 5.50 6.45 5.35 5.03 5.20 5.73
1986 5.35 5.98 5.36 4.94 5.29 5.65
1987 5.46 6.06 5.55 4.92 5.45 5.91
1988 5.55 5.94 5.89 5.04 5.54 6.08
1989 5.59 6.08 5.82 5.11 5.57 5.84
1990 5.59 6.23 5.69 5.08 5.57 5.89
1991 5.49 6.14 5.58 4.99 5.45 5.88
1992 5.50 6.12 5.55 5.02 5.46 6.35
1993 5.51 6.07 5.46 5.06 5.60 6.38
1994 5.54 5.98 5.61 5.04 5.69 6.39
1995 5.60 5.96 5.73 5.09 5.81 6.50
1996 5.66 6.15 5.65 5.17 5.82 6.50
1997 5.61 6.13 5.63 5.05 5.77 6.75
1998 5.44 5.89 5.47 4.90 5.64 6.77
1999 5.53 6.10 5.49 4.86 5.70 6.75
2000 5.76 6.64 5.59 4.93 5.63 6.76
2001 5.64 6.44 5.48 5.00 5.58 6.76
2002 5.58 6.37 5.48 5.00 5.47 6.74
2003 5.77 6.68 5.59 5.03 5.58 6.78
2004 5.96 6.87 5.79 5.16 5.84 6.80
2005 6.20 7.24 5.92 5.15 5.80 6.94
2006 6.25 7.23 6.31 5.20 5.75 6.90
2007 6.32 7.29 6.45 5.34 5.69 6.89
2008 6.51 7.59 6.49 5.51 5.67 6.84
2009 6.11 7.07 6.34 5.25 5.48 6.72
2010 6.31 7.31 6.48 5.36 5.74 6.83
2011 6.48 7.46 6.65 5.64 5.76 6.82
2012 6.41 7.36 6.61 5.66 5.79 6.83
2013 6.41 7.40 6.44 5.60 5.88 6.98
2014 6.39 7.40 6.38 5.58 5.91 6.98
2015 5.95 6.75 6.27 5.45 5.78 6.98
Table 7
Table summary
This table displays the results of Growth rates by decade . The information is grouped by Period (appearing as row headers), Bank of Canada commodity price index, Total, all commodities, Energy, Metals and minerals, Agriculture, Forestry and Fish, calculated using percent units of measure (appearing as column headers).
Period Bank of Canada commodity price index
Total, all commodities Energy Metals and minerals Agriculture Forestry Fish
percent
1870 to 1880 -3.1 -6.5 Note ...: not applicable -3.2 -1.8 Note ...: not applicable
1880 to 1890 -0.9 -0.6 Note ...: not applicable -1.2 0.6 Note ...: not applicable
1890 to 1900 -1.1 0.8 -3.1 -1.3 0.2 Note ...: not applicable
1900 to 1910 2.4 1.7 -1.1 2.5 4.8 Note ...: not applicable
1910 to 1920 7.3 9.9 2.2 6.6 10.0 Note ...: not applicable
1920 to 1930 -5.0 0.0 -2.9 -6.1 -3.9 Note ...: not applicable
1930 to 1940 -0.3 -3.1 2.2 -1.0 -2.9 Note ...: not applicable
1940 to 1950 8.9 7.7 2.6 11.7 10.2 Note ...: not applicable
1950 to 1960 0.9 1.3 3.2 -1.5 2.3 3.4
1960 to 1970 1.5 1.2 3.4 0.5 1.1 5.5
1970 to 1980 12.3 21.0 12.4 7.9 8.5 11.1
1980 to 1990 -0.4 -2.1 -0.6 -0.8 3.3 4.5
1990 to 2000 1.7 4.3 -1.0 -1.4 0.6 9.1
2000 to 2010 5.7 6.9 9.3 4.4 1.1 0.8
2010 to 2015 -7.1 -10.5 -4.2 1.9 0.7 3.0

#### 4.3.1 Historical Bank of Canada commodity price index versus historical events

The first step in assessing the utility of the historical BCPI estimates is to examine the extent to which major historical events are captured. Because historical index values are estimated from a number of projectors, it is important to verify that major events important to the history of commodity prices are represented in the long-run estimates, to ensure that the back-casting methodology produces relevant results for the historical period. For example, the years 1929 to 1933 are expected to show deflation that is among the largest on record, with agriculture prices more affected than other prices.

In the first decade and a half, from 1870 to the mid-1880s, there is a general decline in the historical BCPI and its sub-indexes. This corresponds to a period of deflation in the United States and an appreciation of the Canadian dollar relative to the U.S. dollar, as the United States took action to return to the gold standard at pre-Civil War levels. It accomplished this in 1879 (Powell 2005).

The historical BCPI shows a rapid escalation of prices around the beginning of the First World War, followed by a reduction after the war (see Statistics Canada 2015; Bertram and Percy 1979). The onset of the Great Depression is similarly represented by a decline in historical index values between 1929 and 1932. The historical BCPI fell by 48.0% during these years, with the historical agricultural BCPI experiencing a particularly large decline of 61.4%.

The Second World War and its aftermath correspond with a period of strong price growth for the historical BCPI and all of its sub-indexes. Between 1939 and 1945, the historical BCPI rose by 55.5%, with the agriculture sub-index rising by 101.6%. Then, between 1945 and 1951, the historical BCPI rose by an additional 62.4%. These increases were then followed by a period of relative calm (the late 1950s) and slowly rising inflation rates (the 1960s). This “golden age” is also reflected in the historical index calculations.

Based on general conditions throughout historical periods, the historical BCPI reflects the major events that influenced commodities important to Canada during the 1870-to-1971 period. Consequently, it is possible to draw the inference that the historical values of the index contain information consistent with macroeconomic phenomena.

#### 4.3.2 Long-run Bank of Canada commodity price index versus historical price indexes

While the historical BCPI captures major historical events, its utility is greater if it reflects changes at an annual frequency and if the magnitude of its changes reflects the relative importance of particular events. Consequently, a second step for assessing the utility of the historical calculations is to link them to the BCPI and compare this long-run BCPI with other sources of information.

Here, two price indexes are compared with the long-run BCPI. The first comparison price index is an updated version of the long-run export deflator from Baldwin and Macdonald (2012) (Chart 7). Its time span permits a comparison with the long-run BCPI over the entire 1870-to-2015 period, and thus covers the BCPI and its historical estimates. The second is the Generalized Wholesale Price Index from the Historical Statistics of Canada (Holmes n.d.) (Chart 8), which covers historical estimates and the linking period of the early 1970s.

Data table for Chart 7
Data table for Chart 7
Table summary
This table displays the results of Data table for Chart 7. The information is grouped by Year (appearing as row headers), Export deflator and Bank of Canada commodity price index, total, all commodities, calculated using log of index (1926=100) units of measure (appearing as column headers).
Year Export deflator Bank of Canada commodity price index, total, all commodities
log of index (1926=100)
1870 3.894 4.438
1871 3.949 4.302
1872 3.970 4.261
1873 4.007 4.330
1874 4.027 4.326
1875 4.074 4.267
1876 4.104 4.207
1877 3.998 4.107
1878 4.025 3.982
1879 3.930 3.996
1880 3.953 4.119
1881 3.991 4.288
1882 4.086 4.141
1883 4.109 4.092
1884 4.064 3.985
1885 4.009 3.989
1886 3.978 3.941
1887 3.980 4.003
1888 4.032 4.031
1889 4.031 3.835
1890 4.052 4.024
1891 4.057 3.935
1892 4.047 3.918
1893 4.024 3.930
1894 4.027 3.847
1895 3.982 3.757
1896 3.945 3.773
1897 3.922 3.885
1898 3.987 3.806
1899 3.970 3.842
1900 4.016 3.911
1901 4.041 3.973
1902 4.059 3.979
1903 4.091 3.985
1904 4.101 3.928
1905 4.069 3.951
1906 4.143 3.975
1907 4.187 4.092
1908 4.234 4.123
1909 4.228 4.164
1910 4.238 4.143
1911 4.230 4.192
1912 4.205 4.158
1913 4.220 4.227
1914 4.253 4.264
1915 4.327 4.230
1916 4.446 4.518
1917 4.797 4.814
1918 4.893 4.862
1919 4.938 4.960
1920 5.052 4.843
1921 4.719 4.488
1922 4.540 4.411
1923 4.534 4.410
1924 4.554 4.532
1925 4.637 4.689
1926 4.605 4.605
1927 4.582 4.574
1928 4.549 4.454
1929 4.526 4.540
1930 4.426 4.336
1931 4.243 4.043
1932 4.135 3.887
1933 4.154 4.086
1934 4.243 4.222
1935 4.264 4.320
1936 4.305 4.437
1937 4.394 4.422
1938 4.336 4.285
1939 4.305 4.326
1940 4.397 4.304
1941 4.437 4.468
1942 4.502 4.588
1943 4.553 4.725
1944 4.620 4.734
1945 4.653 4.768
1946 4.748 4.960
1947 4.863 5.171
1948 4.956 5.161
1949 4.930 5.104
1950 5.034 5.153
1951 5.140 5.253
1952 5.131 5.254
1953 5.107 5.208
1954 5.099 5.220
1955 5.138 5.200
1956 5.165 5.221
1957 5.159 5.236
1958 5.154 5.245
1959 5.170 5.241
1960 5.176 5.238
1961 5.191 5.243
1962 5.231 5.255
1963 5.239 5.236
1964 5.260 5.203
1965 5.277 5.229
1966 5.304 5.283
1967 5.322 5.261
1968 5.340 5.283
1969 5.360 5.347
1970 5.393 5.387
1971 5.395 5.409
1972 5.434 5.520
1973 5.566 5.785
1974 5.845 6.040
1975 5.963 6.072
1976 6.017 6.091
1977 6.101 6.099
1978 6.187 6.183
1979 6.354 6.361
1980 6.506 6.545
1981 6.582 6.603
1982 6.602 6.531
1983 6.617 6.533
1984 6.653 6.506
1985 6.674 6.417
1986 6.661 6.267
1987 6.679 6.376
1988 6.681 6.462
1989 6.702 6.504
1990 6.693 6.506
1991 6.657 6.408
1992 6.682 6.412
1993 6.725 6.427
1994 6.781 6.450
1995 6.841 6.513
1996 6.846 6.572
1997 6.845 6.523
1998 6.839 6.356
1999 6.850 6.440
2000 6.911 6.674
2001 6.924 6.551
2002 6.906 6.496
2003 6.890 6.684
2004 6.911 6.878
2005 6.938 7.111
2006 6.940 7.167
2007 6.948 7.232
2008 7.049 7.424
2009 6.947 7.026
2010 6.963 7.227
2011 7.030 7.391
2012 7.022 7.326
2013 7.033 7.324
2014 7.068 7.307
2015 7.036 6.860

Data table for Chart 8
Data table for Chart 8
Table summary
This table displays the results of Data table for Chart 8. The information is grouped by Year (appearing as row headers), Generalized Wholesale Price Index (including gold) and Bank of Canada commodity price index, total, all commodities, calculated using log of index (1926=100) units of measure (appearing as column headers).
Year Generalized Wholesale Price Index (including gold) Bank of Canada commodity price index, total, all commodities
log of index (1926=100)
1870 4.115 4.438
1871 4.135 4.302
1872 4.241 4.261
1873 4.245 4.330
1874 4.197 4.326
1875 4.156 4.267
1876 4.092 4.207
1877 4.038 4.107
1878 3.963 3.982
1879 3.927 3.996
1880 4.016 4.119
1881 4.025 4.288
1882 4.026 4.141
1883 3.995 4.092
1884 3.951 3.985
1885 3.894 3.989
1886 3.880 3.941
1887 3.902 4.003
1888 3.934 4.031
1889 3.936 3.835
1890 3.951 4.024
1891 3.951 3.935
1892 3.878 3.918
1893 3.892 3.930
1894 3.825 3.847
1895 3.806 3.757
1896 3.773 3.773
1897 3.787 3.885
1898 3.832 3.806
1899 3.850 3.842
1900 3.878 3.911
1901 3.900 3.973
1902 3.942 3.979
1903 3.955 3.985
1904 3.966 3.928
1905 3.998 3.951
1906 4.001 3.975
1907 4.077 4.092
1908 4.075 4.123
1909 4.092 4.164
1910 4.103 4.143
1911 4.135 4.192
1912 4.186 4.158
1913 4.163 4.227
1914 4.186 4.264
1915 4.256 4.230
1916 4.432 4.518
1917 4.731 4.814
1918 4.839 4.862
1919 4.889 4.960
1920 5.039 4.843
1921 4.694 4.488
1922 4.574 4.411
1923 4.580 4.410
1924 4.593 4.532
1925 4.625 4.689
1926 4.605 4.605
1927 4.582 4.574
1928 4.569 4.454
1929 4.560 4.540
1930 4.463 4.336
1931 4.284 4.043
1932 4.200 3.887
1933 4.220 4.086
1934 4.271 4.222
1935 4.297 4.320
1936 4.322 4.437
1937 4.429 4.422
1938 4.374 4.285
1939 4.346 4.326
1940 4.431 4.304
1941 4.506 4.468
1942 4.561 4.588
1943 4.600 4.725
1944 4.621 4.734
1945 4.633 4.768
1946 4.683 4.960
1947 4.845 5.171
1948 5.014 5.161
1949 5.039 5.104
1950 5.102 5.153
1951 5.231 5.253
1952 5.170 5.254
1953 5.146 5.208
1954 5.129 5.220
1955 5.138 5.200
1956 5.168 5.221
1957 5.176 5.236
1958 5.178 5.245
1959 5.190 5.241
1960 5.191 5.238
1961 5.202 5.243
1962 5.230 5.255
1963 5.249 5.236
1964 5.252 5.203
1965 5.272 5.229
1966 5.308 5.283
1967 5.326 5.261
1968 5.347 5.283
1969 5.393 5.347
1970 5.407 5.387
1971 5.419 5.409
1972 5.487 5.520
1973 5.681 5.785
1974 5.883 6.040
1975 5.947 6.072
1976 Note ...: not applicable 6.091
1977 Note ...: not applicable 6.099
1978 Note ...: not applicable 6.183
1979 Note ...: not applicable 6.361
1980 Note ...: not applicable 6.545
1981 Note ...: not applicable 6.603
1982 Note ...: not applicable 6.531
1983 Note ...: not applicable 6.533
1984 Note ...: not applicable 6.506
1985 Note ...: not applicable 6.417
1986 Note ...: not applicable 6.267
1987 Note ...: not applicable 6.376
1988 Note ...: not applicable 6.462
1989 Note ...: not applicable 6.504
1990 Note ...: not applicable 6.506
1991 Note ...: not applicable 6.408
1992 Note ...: not applicable 6.412
1993 Note ...: not applicable 6.427
1994 Note ...: not applicable 6.450
1995 Note ...: not applicable 6.513
1996 Note ...: not applicable 6.572
1997 Note ...: not applicable 6.523
1998 Note ...: not applicable 6.356
1999 Note ...: not applicable 6.440
2000 Note ...: not applicable 6.674
2001 Note ...: not applicable 6.551
2002 Note ...: not applicable 6.496
2003 Note ...: not applicable 6.684
2004 Note ...: not applicable 6.878
2005 Note ...: not applicable 7.111
2006 Note ...: not applicable 7.167
2007 Note ...: not applicable 7.232
2008 Note ...: not applicable 7.424
2009 Note ...: not applicable 7.026
2010 Note ...: not applicable 7.227
2011 Note ...: not applicable 7.391
2012 Note ...: not applicable 7.326
2013 Note ...: not applicable 7.324
2014 Note ...: not applicable 7.307
2015 Note ...: not applicable 6.860

With respect to long-run export prices, a one-to-one correlation is not expected. This is because, while commodities are important for exports, exports also include finished and semi-finished products throughout the history of Canada (see Baldwin and Macdonald 2012), and because export prices are measured in Canadian dollars rather than U.S. dollars. For example, there is a significant increase in the long-run BCPI in the 2000s, as commodity prices increased. This translates into rising export prices, but not on the same scale as in the long-run BCPI, owing to the appreciation of the Canadian dollar (which offset some of the price increase in Canadian dollar terms) and to the effect of non-commodity exports, such as motor vehicles. Nevertheless, the movements found in the long-run BCPI do correlate with both the timing and magnitude of changes in export prices.

During the earliest part of the period, when the United States was deflating its economy after the Civil War, the price of exports shows little trend, while the long-run BCPI declines. This may reflect differences between the composition of commodities in the two indexes, differences between resource price changes and non-resource price changes, or differences in index construction, as the historical values for the export price index come from a fixed-weight series, while the long-run BCPI is chain-weighted.

Both the export prices and the long-run BCPI begin trending upward around 1895, and then follow very similar patterns over the course of the First World War, the 1920s and the onset of the Great Depression. The Gold Reserve Act of 1934 raised the value of gold from US$20.67 to US$35.00 per ounce, with the aim of increasing inflation in the United States. This change has a greater effect on the long-run BCPI than on the export price, because monitary gold is classified differently from commodity gold.

A minor difference occurs during the Second World War, as the long-run BCPI rises more quickly than export prices. The source of the difference is not immediately apparent, but may stem from the changing composition of trade towards munitions and armaments because of the war (Baldwin and Macdonald 2012) or from wartime government price controls that could have interrupted the usual peacetime links between supply, demand and price.

The stability of the 1950s and 1960s, as well as the rapid increase in prices of the 1970s and 1980s, are both reflected with similar timing and magnitude in export prices and in the long-run BCPI.

Finally, the latest commodity boom of the 2000s stands out because of the different paths of the two series, the first time this occurs on record. The export price index does not change its trajectory during the 2000s, while the long-run BCPI rises rapidly. This may reflect the path of non-resource exports or the effect of the floating exchange rate, as the commodity boom of the 2000s is the first in the history of Canada where there was no intervention from governments in the form of currency controls or price controls for energy products during a period of rising commodity prices.

The wholesale priceNote 3 index exhibits a tighter relationship with the long-run BCPI than do export prices, but it is available only for a shorter time period. During the early part of the period, from 1870 to around 1895, the wholesale price index and the long-run BCPI both decline, with similar trends, and begin to rise at the same time after the mid-1890s. From this point to the onset of the First World War, they again share a similar trend. A difference then emerges in the year-to-year variation through the 1920s and 1930s. The long-run BCPI exhibits more short-term volatility, which may be caused by compositional differences or the use of an improved, chain-weighted index formula. From the First World War to the end of the wholesale index in 1975, the long-run BCPI and the wholesale index exhibit essentially the same relationship as the BCPI and the export price deflator.Note 4

The comparison of the long-run BCPI with export prices and wholesale prices supports the use of the index at an annual frequency. The year-to-year fluctuations in the long-run BCPI are reflected in other series, the magnitude of changes is in line with other data sources, and they share similar trends. Moreover, because the long-run BCPI is calculated using a chain-weighted index formula, its weights are more accurate than earlier data sources.

Based on their relationship with other indexes, the historical values for the long-run BCPI are judged to be of sufficient utility to merit their use at an annual frequency for economic analysis. The estimates do not exhibit time-series characteristics that are out of line with other data sources, and, as a result, they are useful as inputs for statistical and econometric models and for trend-cycle decompositions.

### 4.4 The behaviour of the long-run commodity price indexes between 1870 and 2015

This section describes a number of characteristics of the long-run BCPI. The discussions aim to illustrate properties of the long-run BCPI series, rather than long-run relationships, which require the construction of more complex models. Across metrics, the complete available dataset is always used. As a result, the number of observations is lower for the metals and minerals and fisheries sub-indexes, owing to their relative lack of data points.

#### 4.4.1 Descriptive statistics for growth rates of the long-run indexes

For the long-run BCPI and for each of the sub-indexes, there is a positive skewness to the distributions of annual growth rates and a degree of kurtosis, indicating that the distributions have thick tails relative to the normal distribution (Table 8). In other words, the series are periodically subject to innovations that are larger than expected (based on a normal distribution), and positive innovations are larger than negative ones. The highest average annual growth rate is for fisheries, for which data are only available after the Second World War. The second-highest is for energy, followed by forestry, metals and minerals and agriculture. In each case, the median lies below the mean, and the skewness is positive for all sub-indexes. The implication is that the more extreme periodic positive shocks that occur raise the arithmetic average of the annual growth rates relative to the mid-point of the distribution.

Similarly, the periodic innovations that create the positive skewness and kurtosis have an outsized influence for measuring long-run growth rates. The influential observations can also create an impression of larger-than-actual growth rates across time, because they tend to bias estimates of average growth upwards, relative to compound annual growth rates based on the first and last periods available. Across the sub-indexes, the effect is present in all commodity groups.

Bank of Canada commodity price index Total, all commodities Energy Metals and minerals Agriculture Forestry 1.68 2.34 1.89 1.15 2.28 5.48 2.41 3.49 2.53 2.19 2.66 6.13 1.54 1.31 1.12 1.57 1.49 2.92 12.05 15.75 11.96 14.89 8.92 12.31 -0.01 0.99 1.25 0.68 0.64 1.51 3.97 7.58 5.51 4.67 4.10 7.44 0.06 0.00 0.00 0.00 0.00 0.00 145 145 129 145 145 68 Source: Statistics Canada, author's compilations.
Bank of Canada commodity price index Total, all commodities Energy Metals and minerals Agriculture Forestry 1.00 0.65 0.58 0.85 0.54 0.19 Note ...: not applicable 1.00 0.33 0.30 0.35 0.02 Note ...: not applicable Note ...: not applicable 1.00 0.42 0.30 0.10 Note ...: not applicable Note ...: not applicable Note ...: not applicable 1.00 0.38 0.17 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 1.00 0.22 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 1.00 144 144 128 144 144 67 ... not applicable Source: Statistics Canada, author's compilations.

The effect of extreme events, particularly positive events, is sufficiently strong that the long-run growth-rate distributions do not appear to be normally distributed. Jarque–Bera tests for normality reject the null hypothesis of a normal distribution at conventional significance levels. The evidence against normality is weakest for the overall index, but quite strong for the sub-indexes

Across the sub-indexes, there is also a limited correlation in their annual growth rates (Table 9). The strongest correlation is between metals and minerals (0.42), while the weakest is between energy and fisheries (0.02). Agriculture and energy have the highest correlations with the long-run BCPI. Generally, annual frequency correlations show moderate to weak relationships between commodity types. In addition, the annual correlations are subject to influential data points, because of the same type of sensitivity the average estimates have, or that ordinary least squares estimates would have, owing to the skewness and kurtosis of the growth-rate distributions.

#### 4.4.2 Periods of accelerated growth

While annual frequency correlations imply that commodity shocks are only modestly correlated across commodity groups, an examination of Chart 6 (the log levels of the indexes) shows a step-like path through time, with periods of rapid change interspersed with periods of calm. This pattern is present in the long-run BCPI and in all sub-indexes, except for fisheries. The pattern recurs repeatedly throughout the history of the long-run BCPI, but is most pronounced after 1900. Moreover, this pattern has a similar timing across all commodity types, except for fisheries. In other words, the pattern suggests that some form of common aggregate shock, rather than idiosyncratic commodity-specific shocks, is present, and that the effect is present over periods spanning multiple years.

Data table for Chart 9
Data table for Chart 9
Table summary
This table displays the results of Data table for Chart 9. The information is grouped by Year (appearing as row headers), Bank of Canada commodity price index, total, all commodities, Energy, Metals and minerals, Agriculture, Forestry and Fish, calculated using percent units of measure (appearing as column headers).
Year Bank of Canada commodity price index, total, all commodities Energy Metals and minerals Agriculture Forestry Fish
percent
1870 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1871 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1872 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1873 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1874 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1875 -4.60 -8.90 Note ...: not applicable -4.65 -2.70 Note ...: not applicable
1876 -1.73 -6.57 Note ...: not applicable -1.52 -2.06 Note ...: not applicable
1877 0.77 -2.46 Note ...: not applicable 1.21 -1.59 Note ...: not applicable
1878 -1.55 -0.75 Note ...: not applicable -1.55 -1.23 Note ...: not applicable
1879 -2.04 1.70 Note ...: not applicable -2.19 -1.12 Note ...: not applicable
1880 -2.53 0.39 Note ...: not applicable -2.93 -0.19 Note ...: not applicable
1881 -1.84 0.50 Note ...: not applicable -2.13 -0.03 Note ...: not applicable
1882 -1.31 1.60 Note ...: not applicable -1.67 0.67 Note ...: not applicable
1883 0.72 4.51 Note ...: not applicable 0.49 1.82 Note ...: not applicable
1884 0.87 5.08 Note ...: not applicable 0.73 1.45 Note ...: not applicable
1885 -2.57 0.20 Note ...: not applicable -3.14 0.66 Note ...: not applicable
1886 -2.29 -3.07 Note ...: not applicable -2.35 -0.08 Note ...: not applicable
1887 -1.72 -3.18 Note ...: not applicable -1.69 -0.85 Note ...: not applicable
1888 -1.37 -3.36 Note ...: not applicable -1.33 -0.83 Note ...: not applicable
1889 -0.12 -1.46 Note ...: not applicable 0.20 -0.71 Note ...: not applicable
1890 -1.04 -2.80 Note ...: not applicable -1.06 -0.35 Note ...: not applicable
1891 -1.48 -2.08 -2.58 -1.55 -0.90 Note ...: not applicable
1892 -2.01 -1.95 -2.35 -2.14 -1.21 Note ...: not applicable
1893 -1.01 -2.01 -3.95 -0.49 -1.23 Note ...: not applicable
1894 0.13 -0.30 -3.40 0.66 -0.94 Note ...: not applicable
1895 -1.79 0.70 -3.39 -2.09 -0.07 Note ...: not applicable
1896 -0.05 1.37 -1.87 0.13 0.47 Note ...: not applicable
1897 0.86 1.80 -2.62 1.53 0.35 Note ...: not applicable
1898 0.79 2.22 -1.86 1.22 1.98 Note ...: not applicable
1899 1.74 3.69 -1.54 2.42 1.90 Note ...: not applicable
1900 2.09 2.83 0.14 2.95 1.35 Note ...: not applicable
1901 2.16 1.90 0.49 2.72 2.82 Note ...: not applicable
1902 1.12 2.70 1.67 0.57 4.42 Note ...: not applicable
1903 3.34 3.39 1.98 3.58 4.97 Note ...: not applicable
1904 3.28 2.40 -0.40 3.58 6.26 Note ...: not applicable
1905 2.96 1.78 -1.13 3.21 6.23 Note ...: not applicable
1906 2.01 1.17 -1.11 1.77 6.24 Note ...: not applicable
1907 2.51 0.57 -0.24 2.43 5.60 Note ...: not applicable
1908 2.06 0.29 0.86 1.62 5.96 Note ...: not applicable
1909 3.47 1.21 0.69 3.14 8.05 Note ...: not applicable
1910 3.64 1.50 -0.48 3.93 6.28 Note ...: not applicable
1911 2.99 1.24 -0.81 3.26 5.97 Note ...: not applicable
1912 5.32 2.27 1.52 6.06 5.12 Note ...: not applicable
1913 8.81 4.96 3.61 10.42 5.32 Note ...: not applicable
1914 8.88 7.46 3.65 10.14 6.44 Note ...: not applicable
1915 10.25 9.52 2.71 11.60 8.43 Note ...: not applicable
1916 8.47 11.21 2.94 8.60 10.39 Note ...: not applicable
1917 5.53 10.51 -0.23 5.23 8.46 Note ...: not applicable
1918 3.90 10.47 0.18 3.64 5.58 Note ...: not applicable
1919 3.47 11.48 0.98 2.65 6.25 Note ...: not applicable
1920 5.29 11.43 -0.09 5.50 5.89 Note ...: not applicable
1921 3.46 9.89 -2.24 3.57 6.61 Note ...: not applicable
1922 -1.26 7.87 -2.67 -2.23 3.69 Note ...: not applicable
1923 -2.14 5.44 -2.87 -3.00 2.02 Note ...: not applicable
1924 -4.54 2.44 -1.89 -5.81 -0.32 Note ...: not applicable
1925 -2.32 0.42 -1.37 -1.99 -2.88 Note ...: not applicable
1926 -1.05 -0.25 -0.90 -0.68 -2.14 Note ...: not applicable
1927 -3.04 -1.38 -2.65 -4.16 -1.66 Note ...: not applicable
1928 -4.64 -2.78 -3.68 -5.92 -3.56 Note ...: not applicable
1929 -3.64 -3.50 -2.69 -2.17 -6.04 Note ...: not applicable
1930 -3.91 -2.82 1.43 -3.70 -6.49 Note ...: not applicable
1931 -1.87 -3.97 1.77 -0.11 -5.97 Note ...: not applicable
1932 -0.16 -3.49 2.42 2.99 -5.38 Note ...: not applicable
1933 0.94 -3.60 3.10 3.56 -4.01 Note ...: not applicable
1934 -1.48 -3.46 1.72 -0.77 -3.98 Note ...: not applicable
1935 1.04 -3.76 3.43 3.02 -2.82 Note ...: not applicable
1936 3.61 -2.34 4.94 6.64 -1.60 Note ...: not applicable
1937 7.20 -0.70 5.72 13.19 1.00 Note ...: not applicable
1938 6.17 0.66 4.94 10.15 4.02 Note ...: not applicable
1939 6.19 1.04 0.37 11.25 6.11 Note ...: not applicable
1940 5.14 2.27 0.17 8.79 6.56 Note ...: not applicable
1941 4.15 2.43 0.12 6.65 6.44 Note ...: not applicable
1942 6.67 4.79 -0.17 10.24 8.95 Note ...: not applicable
1943 10.70 6.15 1.99 16.19 11.20 Note ...: not applicable
1944 10.12 8.78 2.39 14.26 11.60 Note ...: not applicable
1945 9.75 8.43 2.31 13.51 11.61 Note ...: not applicable
1946 8.33 7.82 3.01 9.69 10.88 Note ...: not applicable
1947 8.08 7.68 4.46 8.32 10.50 Note ...: not applicable
1948 6.46 6.75 4.55 5.62 8.83 Note ...: not applicable
1949 5.85 6.69 5.03 4.34 8.47 Note ...: not applicable
1950 5.61 6.32 5.20 3.96 8.30 Note ...: not applicable
1951 3.04 4.52 5.78 0.02 5.48 Note ...: not applicable
1952 0.65 3.27 4.90 -3.03 3.04 2.83
1953 0.94 2.49 3.87 -1.55 2.48 2.24
1954 1.66 2.22 3.57 0.30 2.50 4.82
1955 1.05 1.57 3.43 -0.93 2.41 3.88
1956 -0.15 1.09 2.38 -2.75 1.66 3.83
1957 -0.09 1.38 2.27 -1.98 0.79 3.41
1958 0.53 0.73 1.74 -0.25 0.69 5.55
1959 0.18 0.76 1.56 -1.10 0.70 4.36
1960 0.05 0.88 0.74 -0.94 0.50 4.69
1961 0.11 0.66 0.51 -0.33 0.31 4.27
1962 0.55 -0.45 1.06 0.67 0.62 4.43
1963 0.20 -0.07 1.85 -1.02 0.75 2.28
1964 0.51 0.43 2.02 -0.87 1.11 2.65
1965 1.27 1.03 2.50 0.35 1.60 5.15
1966 1.66 1.15 3.79 0.62 1.47 6.67
1967 1.79 1.92 3.70 -0.16 2.46 5.18
1968 3.29 1.92 4.10 3.57 3.48 8.39
1969 7.02 3.19 7.47 10.76 5.59 11.03
1970 9.95 10.57 11.09 12.28 7.04 10.93
1971 9.71 14.14 9.62 9.45 8.04 10.50
1972 10.16 15.82 9.61 9.56 7.83 14.66
1973 9.99 16.57 9.28 8.41 8.01 15.33
1974 10.24 17.18 9.25 8.64 8.17 13.98
1975 11.96 19.13 12.13 9.74 9.93 14.30
1976 13.94 24.30 15.25 10.98 8.69 13.36
1977 13.31 27.46 13.09 8.17 7.85 10.88
1978 9.17 25.82 7.64 1.44 5.09 9.29
1979 5.96 17.85 5.22 -0.46 3.83 8.20
1980 5.30 13.73 5.68 1.13 2.58 10.19
1981 4.14 10.84 4.26 0.93 2.17 6.88
1982 2.51 5.81 4.05 1.40 2.50 4.44
1983 2.81 5.58 5.77 0.12 3.63 6.41
1984 1.65 1.99 5.99 -0.17 3.25 6.86
1985 -0.12 -2.30 2.28 -0.21 3.84 5.54
1986 -0.77 -3.72 2.63 -0.88 3.66 5.70
1987 -1.03 -4.21 3.20 -1.04 2.95 4.97
1988 -1.00 -3.79 1.36 -0.83 2.77 12.14
1989 -0.54 -3.78 1.39 -0.64 4.33 10.29
1990 0.66 -3.69 4.11 0.38 5.97 9.76
1991 2.94 0.17 5.51 1.81 6.27 11.76
1992 2.34 1.59 2.25 3.04 4.46 8.55
1993 0.80 2.63 -2.36 0.37 2.84 9.66
1994 -1.38 -1.37 -3.29 -2.01 1.22 12.30
1995 -0.43 -0.48 -1.67 -2.07 1.82 11.49
1996 3.54 8.40 0.62 -0.32 2.39 11.66
1997 2.20 6.60 -0.19 0.14 1.61 4.98
1998 1.44 6.34 0.71 -0.37 -1.07 4.49
1999 3.49 11.39 0.28 0.16 -0.91 4.80
2000 5.14 13.96 1.23 1.25 1.04 3.82
2001 7.37 16.64 3.64 0.11 0.54 5.45
2002 8.55 16.75 9.09 1.94 0.51 1.83
2003 11.00 19.83 12.51 5.20 1.13 1.42
2004 12.39 21.05 12.69 7.64 0.35 1.16
2005 5.80 8.58 10.03 4.30 -0.92 -0.19
2006 9.57 13.52 12.85 4.72 3.04 1.14
2007 12.13 16.16 14.91 8.31 4.43 1.26
2008 9.14 10.94 13.22 8.22 3.39 0.79
2009 6.74 9.18 8.96 6.09 1.21 2.43
2010 3.63 4.08 6.82 5.95 1.88 0.78
2011 -1.01 -1.06 0.37 4.07 1.06 1.20
2012 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2013 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2014 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2015 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable

One way to illustrate the pattern seen in Chart 6 is to calculate growth rates for the long-run BCPI by decade. During particular decades—1910 to 1920, 1940 to 1950 and 1970 to 1980 (Table 7) —there is a rapid increase in commodity prices, while in the decade or two that follow, there is retrenchment or only minor growth. Once again, a sequence of periods that exert strong pressure followed by periods of relative calm prevails through time.

An alternative method of illustrating the pattern of growth followed by calm is to apply a moving average to growth rates. While this is not a sophisticated way to filter the time series, it is useful for demonstrating the on-again, off-again growth found across commodity types. Here, a nine-period central moving average of year-to-year changes in the sub-indexes is shown (Chart 9). The moving averages imply that, since 1900, Canada has been subject to four waves of commodity price increases. In the first half of the period, there is a period of accelerating commodity price growth, culminating with the First World War, before a period of retrenchment in the 1920s and 1930s. Another cycle starts thereafter and grows through the 1940s, before a period of low growth rates in the 1950s and 1960s. The 1970s usher in the third increase in commodity prices, followed by a period in the late 1980s and 1990s of weak growth. The fourth, and latest, wave occurs in the 2000s.

Description for Chart 10

The title of the chart is "Box and whisker plots for the growth rates of the long-run Bank of Canada commodity price index, commodities by year."

This is a box and whisker chart.

There are in total 139 years on the horizontal axis, ranging from 1870 to 2008. The vertical axis starts at -80 and ends at 150, with graduation marks every 10 points.

There 135 box and whisker plots, one for each year, in this graph.

The vertical axis is "percent change."

The horizontal axis is "years."

Chart 10 shows box and whisker plots for changes in the prices of commodities included in the Bank of Canada commodity price index (BCPI). Each box and whisker plot comprises a tall, skinny rectangle (the box) and a line extending up and down from the rectangle (the whiskers). The minimum value of each box (the bottom of the rectangle) is the first quartile (Q1). The maximum value of each box (the top of the rectangle) is the third quartile (Q3). The length of each box represents the dispersion of the middle 50% of observations.

The whiskers extend from the box at the top and the bottom to a maximum possible length of Q1 minus 1.5 times the interquartile range or Q3 plus 1.5 times the interquartile range. The interquartile range is defined as Q1 minus Q3. For whiskers at the bottom of the box and whisker plot, the length of each whisker extends to the actual value for a price change that is below Q1, but closest to Q1 minus 1.5 times the interquartile range. For whiskers at the top of the box and whisker plot, the length of each whisker extends up from Q3 to the actual price change that is closest to, but still less than or equal to Q3 plus 1.5 times the interquartile range.

The box and whisker plots provide information about the shape of the distribution for price changes of BCPI commodities. If there is a general increase in commodity prices, then the box shifts up. If there is increased variance across commodity prices, the length of the box increases. If there is asymmetric growth in commodity prices, the box can shift up and elongate, or extend itself only in an upward direction indicating greater variance and a rising average. The whiskers accentuate these movements by providing additional information about changes in the tails of the distributions.

Over the 1870-to-2008 period, the time series of box and whisker plots oscillates up and down in a cyclical fashion. In some periods, such as around the First World War or the 1970s, the oscillation is larger, while in others, such as the 1950s, the oscillations are smaller. Outside of the First World War, the oscillations tend to be larger in the period after the early 1970s than in previous periods. The onset of the Great Depression coincides with a multi-year period with little positive price.

The length of the boxes also changes through time. Those periods with the largest oscillations also tend to be the periods with the greatest variability. This shows itself as boxes of increased length during the period after 1970, around the onset of the Great Depression and around the First World War. The 1950s and 1960s have small oscillations and short boxes.

The whiskers reinforce the changes in variability shown by the increasing or decreasing height of the boxes. However, they also contain additional information about price growth in particular periods because they do not expand and contract in the same manner from above and below. During periods of price increase, particularly around the First World War and the early 1970s, the whisker rising form Q3 elongates more than the whisker descending from Q1. The implication is the small or negative values are uncommon while larger than expected positive growth areas are more common. The reverse occurs during the onset of the Great Depression. During these years the whisker at the top of the plot is virtually non-existent while the whisker that descends from Q1 (in this case into negative growth rates) becomes elongated.

The source of Chart 10 is “Statistics Canada, author’s calculations.”

A third way to examine the on-again, off-again growth is to look at the distributions in price growth across commodities. Chart 10 shows box plots for the growth of the individual price series that go into the BCPI. The box plots are drawn so that the length of the box covers the 25th to the 75th percentile observations of the distribution. The whiskers extend to the upper and lower adjacent values. The upper adjacent value corresponds to the sum of the largest observation below the 75th percentile value plus 1.5 times the interquartile range. The lower adjacent value corresponds to the smallest observation above the 25th percentile value minus 1.5 times the interquartile range. Outliers, of which there are some extreme values, are not shown.

Chart 10 shows that when periods of growth occur, the entire distribution of price growth tends to increase. This does not mean that every commodity rises by the same amount, or that the position of a commodity in the distribution is fixed through time. Rather, the up-and-down fluctuations of the distributions suggest a more broadly based source of price changes during the periods of stronger price growth, rather than commodity-specific, or commodity-group-specific, changes.

Additionally, the spread of commodity-price movements, which in the box plots is represented by the length of the box and whiskers, increases during periods of stronger price growth and contracts during periods of slower price growth. In other words, commodity price changes exhibit greater variation during periods of more rapid increase.

Finally, periods of heightened price growth exhibit a degree of serial correlation, so that the periods of accelerated growth are not randomly dispersed. Instead, the distribution of growth rates increases for a number of years in a row, in periods such as the First World War or the 1970s, which are then followed by a number of years where the distribution is lower.

#### 4.4.3 Commodity price shocks

The source of the dynamics in commodity-price movements is of considerable interest, and two competing hypotheses are presented. The first is that changes in monetary policy regime are responsible. The second stems from the study of commodity super cycles and suggests that demand- and supply-based changes are primarily responsible. Rather than argue for one or the other, this paper will simply note that there is support for both theories and that it is difficult to gain sufficient degrees of freedom to disentangle them.

4.4.3.1 Monetary policy shocks

The notion that changes in monetary policy correspond with rapid growth of commodity markets could be interpreted in three ways. The first is that the periods of accelerated commodity price growth reflect changes in the overall price level. In this case the real price of commodities, that is, the long-run BCPI deflated by an aggregate price index, should be fairly flat, and should not exhibit large changes around monetary regime changes. A second is that changes in monetary policy elicit relative price changes (Balke and Wynne 2003), and that commodity prices in particular are more sensitive (Clarke 1999). Under this hypothesis, the real price of commodities increases sharply around changes in monetary regime. A third possibility is that the relationship is spurious. Major changes in economic order could be derived from various societal pressures, and when shifts occur, they affect many aspects of an economy or society, including the relative price of commodities and monetary policy.

In the period between 1870 and 2015, there were 4 (possibly 5) major monetary policy regimes. The first is the period under the classical gold standard (1870 to the First World War), the second covers the inter-war period where nations attempted to re-establish the gold standard, the third is the Bretton-Woods period from the end of the Second World War until the early 1970s, and the fourth is the period of fiat currencies in place from the end of the Bretton Woods period until the present (see Bordo 1993, 2008).Note 5

The possible fifth regime, which is less clear, could come from a transition to a multi-polar monetary system. In this respect, the emergence of Brazil, Russia, India and China (BRIC nations), and particularly of China, had the effect of greatly changing international monetary policy, and so could be interpreted to have initiated a period of monetary policy regime change (see for example The Economist 2005). Similarly, the adoption of the Euro in 1999 could be argued to have changed international monetary policy arrangements. These events moved the global economy towards a multi-polar monetary system (Dailami and Masson 2009), and may therefore represent a major shift in monetary policy, but unlike previous shifts since 1870, one that occurred outside of the United States.

To examine whether or not periods of more rapid commodity price increases are consistent with changes in the overall price level, the long-run BCPI is deflated by the U.S. final domestic expenditure (FDE) deflator (Chart 11). The U.S. FDE deflator is used because the prices in the long-run BCPI are in U.S. dollars. The long-run index shows that over the 145 years covered, commodity price inflation accelerates at around the same time that major changes in monetary policy regime. These accelerations also occur when the long-run BPCI is deflated using a U.S. final domestic expenditure price indexNote 6 (Chart 11). The rapid increases in the real long-run BCPI around the First World War, the Second World War, the end of the Bretton Woods period, and over the 2000s provide strong evidence that commodity prices adjust more than the overall price level. In other words, the deflated data do not support the notion that periods of accelerated commodity price change simply reflect periods of more rapidly rising overall price levels.

Data table for Chart 11
Data table for Chart 11
Table summary
This table displays the results of Data table for Chart 11. The information is grouped by Year (appearing as row headers), Average, Bank of Canada commodity price index / U.S. final domestic expenditure price index, First World War shock, Second World War shock, First oil shock, Second oil shock and 2000s commodities boom, calculated using index (1972=100) units of measure (appearing as column headers).
Year Average Bank of Canada commodity price index / U.S. final domestic expenditure price index First World War shock Second World War shock First oil shock Second oil shock 2000s commodities boom
index (1972=100)
1870 109.29 122.53 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1871 109.29 108.07 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1872 109.29 106.99 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1873 109.29 115.51 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1874 109.29 119.10 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1875 109.29 117.98 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1876 109.29 115.48 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1877 109.29 105.28 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1878 109.29 98.72 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1879 109.29 103.86 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1880 109.29 111.75 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1881 109.29 133.75 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1882 109.29 113.30 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1883 109.29 111.71 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1884 109.29 105.17 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1885 109.29 108.32 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1886 109.29 102.94 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1887 109.29 109.22 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1888 109.29 111.02 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1889 109.29 90.50 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1890 109.29 112.02 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1891 109.29 102.92 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1892 109.29 102.19 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1893 109.29 102.64 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1894 109.29 99.57 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1895 109.29 92.81 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1896 109.29 93.82 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1897 109.29 106.76 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1898 109.29 97.30 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1899 109.29 99.32 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1900 109.29 104.77 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1901 109.29 111.02 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1902 109.29 110.26 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1903 109.29 108.32 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1904 109.29 101.35 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1905 109.29 103.10 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1906 109.29 102.46 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1907 109.29 110.39 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1908 109.29 116.65 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1909 109.29 121.81 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1910 109.29 114.68 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1911 109.29 119.91 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1912 109.29 112.88 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1913 109.29 120.28 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1914 109.29 123.51 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1915 109.29 116.96 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1916 109.29 144.91 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1917 109.29 164.65 164.65 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1918 109.29 147.41 152.14 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1919 109.29 141.20 142.61 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1920 109.29 107.67 135.25 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1921 109.29 87.02 129.50 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1922 109.29 86.41 124.97 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1923 109.29 83.64 121.38 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1924 109.29 94.50 118.52 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1925 109.29 108.21 116.22 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1926 109.29 98.59 114.37 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1927 109.29 97.31 112.88 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1928 109.29 87.28 111.67 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1929 109.29 95.16 110.69 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1930 109.29 80.87 109.90 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1931 109.29 66.90 109.25 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1932 109.29 64.78 108.72 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1933 109.29 81.30 108.29 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1934 109.29 88.86 107.94 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1935 109.29 96.18 107.65 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1936 109.29 106.61 107.42 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1937 109.29 101.12 107.23 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1938 109.29 89.99 107.07 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1939 109.29 94.74 106.94 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1940 109.29 91.92 106.84 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1941 109.29 101.77 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1942 109.29 106.17 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1943 109.29 116.23 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1944 109.29 114.71 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1945 109.29 115.66 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1946 109.29 123.66 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1947 109.29 137.49 Note ...: not applicable 137.49 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1948 109.29 128.74 Note ...: not applicable 131.26 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1949 109.29 121.39 Note ...: not applicable 126.36 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1950 109.29 125.88 Note ...: not applicable 122.48 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1951 109.29 130.04 Note ...: not applicable 119.40 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1952 109.29 127.52 Note ...: not applicable 116.93 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1953 109.29 120.44 Note ...: not applicable 114.94 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1954 109.29 120.62 Note ...: not applicable 113.34 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1955 109.29 116.60 Note ...: not applicable 112.05 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1956 109.29 115.13 Note ...: not applicable 111.00 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1957 109.29 113.10 Note ...: not applicable 110.14 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1958 109.29 111.68 Note ...: not applicable 109.45 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1959 109.29 109.69 Note ...: not applicable 108.89 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1960 109.29 107.91 Note ...: not applicable 108.43 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1961 109.29 107.39 Note ...: not applicable 108.05 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1962 109.29 107.36 Note ...: not applicable 107.74 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1963 109.29 104.07 Note ...: not applicable 107.49 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1964 109.29 99.16 Note ...: not applicable 107.29 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1965 109.29 100.03 Note ...: not applicable 107.12 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1966 109.29 102.71 Note ...: not applicable 106.98 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1967 109.29 97.75 Note ...: not applicable 106.87 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1968 109.29 95.93 Note ...: not applicable 106.78 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1969 109.29 97.45 Note ...: not applicable 106.70 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1970 109.29 96.23 Note ...: not applicable 106.64 Note ...: not applicable Note ...: not applicable Note ...: not applicable
1971 109.29 93.57 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1972 109.29 100.00 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1973 109.29 123.35 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
1974 109.29 144.53 Note ...: not applicable Note ...: not applicable 144.53 Note ...: not applicable Note ...: not applicable
1975 109.29 136.83 Note ...: not applicable Note ...: not applicable 136.74 Note ...: not applicable Note ...: not applicable
1976 109.29 132.17 Note ...: not applicable Note ...: not applicable 130.67 Note ...: not applicable Note ...: not applicable
1977 109.29 124.97 Note ...: not applicable Note ...: not applicable 125.89 Note ...: not applicable Note ...: not applicable
1978 109.29 126.89 Note ...: not applicable Note ...: not applicable 122.11 Note ...: not applicable Note ...: not applicable
1979 109.29 139.53 Note ...: not applicable Note ...: not applicable 119.10 Note ...: not applicable Note ...: not applicable
1980 109.29 151.85 Note ...: not applicable Note ...: not applicable 116.69 151.85 Note ...: not applicable
1981 109.29 147.46 Note ...: not applicable Note ...: not applicable 114.75 142.38 Note ...: not applicable
1982 109.29 129.84 Note ...: not applicable Note ...: not applicable 113.19 135.07 Note ...: not applicable
1983 109.29 125.62 Note ...: not applicable Note ...: not applicable 111.92 129.36 Note ...: not applicable
1984 109.29 118.42 Note ...: not applicable Note ...: not applicable 110.90 124.86 Note ...: not applicable
1985 109.29 105.14 Note ...: not applicable Note ...: not applicable 110.06 121.29 Note ...: not applicable
1986 109.29 88.63 Note ...: not applicable Note ...: not applicable 109.38 118.45 Note ...: not applicable
1987 109.29 96.12 Note ...: not applicable Note ...: not applicable 108.83 116.17 Note ...: not applicable
1988 109.29 101.26 Note ...: not applicable Note ...: not applicable 108.38 114.33 Note ...: not applicable
1989 109.29 101.59 Note ...: not applicable Note ...: not applicable 108.01 112.85 Note ...: not applicable
1990 109.29 97.94 Note ...: not applicable Note ...: not applicable 107.71 111.64 Note ...: not applicable
1991 109.29 86.19 Note ...: not applicable Note ...: not applicable 107.47 110.67 Note ...: not applicable
1992 109.29 84.57 Note ...: not applicable Note ...: not applicable 107.27 109.88 Note ...: not applicable
1993 109.29 83.96 Note ...: not applicable Note ...: not applicable 107.10 109.23 Note ...: not applicable
1994 109.29 84.10 Note ...: not applicable Note ...: not applicable 106.97 108.71 Note ...: not applicable
1995 109.29 87.71 Note ...: not applicable Note ...: not applicable 106.86 108.28 Note ...: not applicable
1996 109.29 91.48 Note ...: not applicable Note ...: not applicable 106.77 107.93 Note ...: not applicable
1997 109.29 85.85 Note ...: not applicable Note ...: not applicable 106.69 107.65 Note ...: not applicable
1998 109.29 72.17 Note ...: not applicable Note ...: not applicable Note ...: not applicable 107.41 Note ...: not applicable
1999 109.29 77.26 Note ...: not applicable Note ...: not applicable Note ...: not applicable 107.22 Note ...: not applicable
2000 109.29 95.22 Note ...: not applicable Note ...: not applicable Note ...: not applicable 107.07 Note ...: not applicable
2001 109.29 82.57 Note ...: not applicable Note ...: not applicable Note ...: not applicable 106.94 Note ...: not applicable
2002 109.29 77.10 Note ...: not applicable Note ...: not applicable Note ...: not applicable 106.83 Note ...: not applicable
2003 109.29 91.07 Note ...: not applicable Note ...: not applicable Note ...: not applicable 106.75 Note ...: not applicable
2004 109.29 107.41 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2005 109.29 130.97 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2006 109.29 134.24 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2007 109.29 139.42 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable
2008 109.29 164.17 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 164.17
2009 109.29 110.48 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 151.78
2010 109.29 133.06 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 142.33
2011 109.29 153.02 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 135.03
2012 109.29 141.02 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 129.33
2013 109.29 138.79 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 124.84
2014 109.29 134.07 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 121.27
2015 109.29 85.43 Note ...: not applicable Note ...: not applicable Note ...: not applicable Note ...: not applicable 118.43

The deflated long-run BCPI shows periods of more rapid acceleration than the general price level during the periods when growth in the long-run BCPI accelerates. The periods of relative price increase are followed by (often longer) periods of decline towards the original relative price structure. The pattern of a rapid increase in relative commodity prices followed by a return to a more normal relative price structure resembles a time series in which periodic shocks perturb a system that then returns towards equilibrium. Chart 11 demonstrates this for the periods of relative commodity price decline following significant positive shocks.

A value for the “normal” relative price of commodities is estimated based on the long-run averages of all data points. An autoregressive, or AR(1), model, is estimated using the complete sample, and the projected path from the peak of each regime change back to the average is shown in Chart 11.Note 7 In the case of the 1970s transition, the path from the 1973 and 1979 peaks are shown. The estimated path to return to equilibrium fits well with the path of the relative price of commodities during its return towards equilibrium, except during the period covered by Bretton Woods after the Second World War. However, the simple AR(1) model is unable to match the overshooting that occurs in each period.

Nevertheless, the AR(1) model is compatible with a system where periodic shocks (in this case major changes to monetary policy regime) create a relative price change. That relative price change is then worked out of the system over a period of 9 to 11 years (roughly half a generation). This period is quite long, well in excess of more typical periods of adjustment associated with monetary shocks.

In summary, there are a number of periods when changes in monetary policy regime coincide with important changes in the relative price of commodities, and the behaviour of commodity prices relative to the U.S. FDE deflator could be interpreted to follow an autoregressive-model-type adjustment pattern. There is support for the hypothesis that factors beyond changes in the general price levels are important for commodity price growth and that changes in relative commodity prices may correspond with changes in monetary policy regime.

While there is support for the notion that major changes in monetary policy regime can influence the relative price of commodities, in the context of this paper, there are not sufficient degrees of freedom to disentangle the effect of monetary policy regime changes from the effect of historical events. Major changes affecting economic systems, such as the two world wars or the emergence of the Euro and BRIC nations, can cause significant change throughout economies. It may therefore be unsurprising that major relative price adjustments and changes in policy stance occur simultaneously. An inference problem thus arises, where it becomes difficult to identify whether the change in monetary policy regime was responsible for the change in relative commodity prices, or whether the changes in relative commodity prices and monetary policy regime changes are due to more general changes brought about by major historical events.

#### 4.4.4 Super cycles

An alternative to the role of monetary policy is the presence of a cycle in the long-run real BCPI that has a multi-year duration. This type of “super cycle” has recently been described for particular prices (see, for example, Jacks 2013; Cuddington and Jerrett 2008; Jerrett and Cuddington 2008). Super cycles are said to occur as periods of increased demand (often argued to stem from mass industrialization or from urbanization) cause accelerated price growth that only returns to trend over decades because of constraints in the supply response (Jacks 2013; Erten and Ocampo 2013).

In the context of the long-run real BCPI, the two world wars coincided with periods of rapid, mass industrialization in North America, but also with a great destruction of production capacity in Europe and Asia. The role of mass industrialization in commodity demand in global markets is, therefore, unclear for the long-run real BCPI. The 1970s coincided with a broad-based commodity price increase, but, because of the role of the oil shocks, this is often characterized as a period of supply disruption and de-industrialization in developed economies.

During the 1870-to-2015 sample period, the two most significant periods of urbanization in the United States occurred early: in the late 1800s and early 1900s, and in the 1950s. However, these correspond to periods of decline or stagnation in the long-run real BCPI. The period from the mid-1990s to 2015 also represented a period of important urbanization, but one that stemmed from changes in the BRIC nations rather than in the United States.

Relative to historical events, the super-cycle hypothesis based on mass industrialization or urbanization is less consistent with known events. Nevertheless, super cycles are presented here for two reasons.

First, a number of periods of significant demand and supply changes coincide with periods of more rapid commodity price growth. War demand, supply disruption and the integration of the BRIC nations into the global economy in the 1990s and 2000s all represent periods when real economy influences, rather than monetary effects, may be responsible for the pattern of acceleration followed by calm found in the long-run real BCPI, even if their timing does not directly align with periods of urbanization or mass industrialization.

Second, the periodic acceleration found in the long-run real BCPI has a noteworthy degree of cyclicality. Beginning with the First World War, there is a period of accelerated commodity growth roughly every 30 to 35 years. So, while the sources may be different, there may also be a set of responses in economies that is stable across time and that affects economic performance for the following generation.

Super cycles are measured here using the asymmetric band-pass filter developed by Christiano and Fitzgerald (2003). This follows the practice of Jacks (2013) and Cuddington and Jerrett (2008). The band-pass filter is used to decompose the logarithm of a price series into a long-run trend, a super-cycle component spanning 20 to 70 years, and another component spanning less than 20 years, as follows:

$\mathrm{ln}P\equiv \mathrm{ln}{P}^{Trend}+\mathrm{ln}{P}^{Super\text{ }cycle}+\mathrm{ln}{P}^{Other}$

The trend component is illustrated relative to the natural logarithm of the long-run real BCPI in Chart 12, while the deviation from the long-run trend and the super cycle are illustrated in Chart 13. The long-run trend is not required to be constant through time and is permitted to adjust as the low-frequency behaviour of the series evolves. In the case of the logarithm of the long-run real BCPI, the long-run trend first declines during the period of generally falling prices in the 1870s and 1880s, before turning positive until the late 1960s. It then declines modestly until the end of the sample period.

Data table for Chart 12
Data table for Chart 12
Table summary
This table displays the results of Data table for Chart 12. The information is grouped by Year (appearing as row headers), Real BCPI, total, all commodities and Long-run trend, calculated using BCPI/PFDE U.S. units of measure (appearing as column headers).
Year Real BCPI, total, all commodities Long-run trend
BCPI/PFDE U.S.
1870 122.53 116.38
1871 108.07 116.02
1872 106.99 115.66
1873 115.51 115.30
1874 119.10 114.94
1875 117.98 114.58
1876 115.48 114.22
1877 105.28 113.86
1878 98.72 113.50
1879 103.86 113.15
1880 111.75 112.80
1881 133.75 112.45
1882 113.30 112.11
1883 111.71 111.77
1884 105.17 111.43
1885 108.32 111.10
1886 102.94 110.78
1887 109.22 110.47
1888 111.02 110.16
1889 90.50 109.86
1890 112.02 109.56
1891 102.92 109.28
1892 102.19 109.00
1893 102.64 108.74
1894 99.57 108.48
1895 92.81 108.23
1896 93.82 107.99
1897 106.76 107.76
1898 97.30 107.55
1899 99.32 107.34
1900 104.77 107.14
1901 111.02 106.95
1902 110.26 106.78
1903 108.32 106.61
1904 101.35 106.45
1905 103.10 106.31
1906 102.46 106.17
1907 110.39 106.05
1908 116.65 105.94
1909 121.81 105.84
1910 114.68 105.75
1911 119.91 105.67
1912 112.88 105.60
1913 120.28 105.54
1914 123.51 105.49
1915 116.96 105.45
1916 144.91 105.42
1917 164.65 105.40
1918 147.41 105.39
1919 141.20 105.39
1920 107.67 105.40
1921 87.02 105.42
1922 86.41 105.45
1923 83.64 105.49
1924 94.50 105.54
1925 108.21 105.60
1926 98.59 105.66
1927 97.31 105.74
1928 87.28 105.82
1929 95.16 105.91
1930 80.87 106.01
1931 66.90 106.12
1932 64.78 106.23
1933 81.30 106.36
1934 88.86 106.49
1935 96.18 106.62
1936 106.61 106.77
1937 101.12 106.92
1938 89.99 107.07
1939 94.74 107.24
1940 91.92 107.40
1941 101.77 107.58
1942 106.17 107.76
1943 116.23 107.94
1944 114.71 108.12
1945 115.66 108.31
1946 123.66 108.51
1947 137.49 108.70
1948 128.74 108.90
1949 121.39 109.10
1950 125.88 109.30
1951 130.04 109.50
1952 127.52 109.70
1953 120.44 109.90
1954 120.62 110.10
1955 116.60 110.30
1956 115.13 110.49
1957 113.10 110.68
1958 111.68 110.87
1959 109.69 111.05
1960 107.91 111.23
1961 107.39 111.40
1962 107.36 111.56
1963 104.07 111.72
1964 99.16 111.87
1965 100.03 112.01
1966 102.71 112.14
1967 97.75 112.25
1968 95.93 112.36
1969 97.45 112.45
1970 96.23 112.53
1971 93.57 112.60
1972 100.00 112.65
1973 123.35 112.69
1974 144.53 112.71
1975 136.83 112.72
1976 132.17 112.71
1977 124.97 112.68
1978 126.89 112.63
1979 139.53 112.57
1980 151.85 112.48
1981 147.46 112.38
1982 129.84 112.25
1983 125.62 112.11
1984 118.42 111.95
1985 105.14 111.76
1986 88.63 111.56
1987 96.12 111.33
1988 101.26 111.09
1989 101.59 110.82
1990 97.94 110.53
1991 86.19 110.23
1992 84.57 109.90
1993 83.96 109.55
1994 84.10 109.19
1995 87.71 108.80
1996 91.48 108.40
1997 85.85 107.98
1998 72.17 107.54
1999 77.26 107.09
2000 95.22 106.61
2001 82.57 106.13
2002 77.10 105.63
2003 91.07 105.11
2004 107.41 104.59
2005 130.97 104.05
2006 134.24 103.50
2007 139.42 102.95
2008 164.17 102.38
2009 110.48 101.81
2010 133.06 101.23
2011 153.02 100.64
2012 141.02 100.06
2013 138.79 99.47
2014 134.07 98.87
2015 85.43 98.28

The deviation from the long-run trend and the super-cycle component follow a similar path, with the difference between the two representing other shorter-term deviations that reflect idiosyncratic shocks and business cycles. The super cycle in the long-run real BCPI has peaks in 1915, 1949, 1980 and 2009, with 34 years between the first two peaks, 31 years between the second two peaks and 29 years between the last two. The troughs occur in 1898, 1932, 1966 and 1995, with 34, 34 and 29 years, respectively, between them. On average, the cycles take an average of 15.5 years to move from a trough to a peak and 16.3 years to move from a peak to a trough.

Across the cycles, 1950s is the mildest, while the trough that coincides with the commodity price weakness in the 1990s is the deepest. The highest peak is the final peak (2009), which has the greatest amplitude of all cycles in the sample.

Data table for Chart 13
Data table for Chart 13
Table summary
This table displays the results of Data table for Chart 13. The information is grouped by Year (appearing as row headers), Detrended real BCPI and Super cycle, calculated using deviation units of measure (appearing as column headers).
Year Detrended real BCPI Super cycle
deviation
1870 6.15 0.74
1871 -7.95 0.21
1872 -8.67 -0.32
1873 0.21 -0.83
1874 4.15 -1.30
1875 3.40 -1.71
1876 1.26 -2.04
1877 -8.58 -2.30
1878 -14.78 -2.46
1879 -9.29 -2.55
1880 -1.05 -2.56
1881 21.30 -2.51
1882 1.20 -2.42
1883 -0.06 -2.33
1884 -6.26 -2.25
1885 -2.78 -2.22
1886 -7.84 -2.27
1887 -1.25 -2.42
1888 0.86 -2.69
1889 -19.35 -3.08
1890 2.45 -3.59
1891 -6.36 -4.20
1892 -6.82 -4.90
1893 -6.10 -5.64
1894 -8.91 -6.37
1895 -15.42 -7.04
1896 -14.17 -7.59
1897 -1.00 -7.94
1898 -10.25 -8.03
1899 -8.02 -7.81
1900 -2.37 -7.23
1901 4.06 -6.25
1902 3.48 -4.87
1903 1.71 -3.08
1904 -5.10 -0.91
1905 -3.21 1.58
1906 -3.72 4.33
1907 4.34 7.24
1908 10.71 10.21
1909 15.97 13.12
1910 8.94 15.83
1911 14.24 18.22
1912 7.28 20.18
1913 14.74 21.58
1914 18.03 22.34
1915 11.51 22.39
1916 39.49 21.68
1917 59.25 20.22
1918 42.02 18.01
1919 35.81 15.13
1920 2.27 11.65
1921 -18.40 7.69
1922 -19.04 3.38
1923 -21.85 -1.13
1924 -11.04 -5.66
1925 2.61 -10.07
1926 -7.08 -14.18
1927 -8.43 -17.85
1928 -18.54 -20.94
1929 -10.76 -23.37
1930 -25.15 -25.04
1931 -39.22 -25.91
1932 -41.46 -25.96
1933 -25.05 -25.22
1934 -17.63 -23.73
1935 -10.45 -21.56
1936 -0.16 -18.80
1937 -5.80 -15.58
1938 -17.09 -12.01
1939 -12.50 -8.22
1940 -15.48 -4.34
1941 -5.81 -0.51
1942 -1.58 3.17
1943 8.29 6.58
1944 6.59 9.64
1945 7.34 12.27
1946 15.16 14.41
1947 28.79 16.03
1948 19.84 17.10
1949 12.29 17.60
1950 16.58 17.56
1951 20.54 16.97
1952 17.82 15.89
1953 10.53 14.34
1954 10.52 12.38
1955 6.30 10.07
1956 4.64 7.49
1957 2.42 4.71
1958 0.81 1.83
1959 -1.37 -1.06
1960 -3.32 -3.85
1961 -4.01 -6.44
1962 -4.20 -8.72
1963 -7.65 -10.60
1964 -12.70 -11.96
1965 -11.97 -12.74
1966 -9.42 -12.86
1967 -14.51 -12.29
1968 -16.43 -11.01
1969 -15.00 -9.05
1970 -16.30 -6.44
1971 -19.03 -3.30
1972 -12.65 0.28
1973 10.66 4.12
1974 31.82 8.05
1975 24.11 11.87
1976 19.46 15.38
1977 12.29 18.37
1978 14.26 20.63
1979 26.97 22.02
1980 39.37 22.38
1981 35.08 21.63
1982 17.59 19.74
1983 13.51 16.72
1984 6.48 12.66
1985 -6.62 7.71
1986 -22.93 2.04
1987 -15.21 -4.08
1988 -9.83 -10.39
1989 -9.23 -16.58
1990 -12.60 -22.36
1991 -24.04 -27.41
1992 -25.33 -31.49
1993 -25.59 -34.36
1994 -25.09 -35.86
1995 -21.09 -35.88
1996 -16.92 -34.39
1997 -22.13 -31.44
1998 -35.37 -27.15
1999 -29.83 -21.71
2000 -11.39 -15.37
2001 -23.56 -8.43
2002 -28.52 -1.20
2003 -14.05 5.98
2004 2.82 12.78
2005 26.92 18.90
2006 30.73 24.07
2007 36.47 28.09
2008 61.79 30.80
2009 8.67 32.14
2010 31.83 32.11
2011 52.38 30.77
2012 40.96 28.25
2013 39.32 24.75
2014 35.19 20.50
2015 -12.86 15.75

Data table for Chart 14
Data table for Chart 14
Table summary
This table displays the results of Data table for Chart 14. The information is grouped by Year (appearing as row headers), BCPI, total, all commodities, Energy, Metals and minerals, Agriculture and Forestry, calculated using deviation units of measure (appearing as column headers).
Year BCPI, total, all commodities Energy Metals and minerals Agriculture Forestry
deviation
1870 0.74 -0.59 Note ...: not applicable 0.22 2.26
1871 0.21 -1.86 Note ...: not applicable -0.52 1.85
1872 -0.32 -2.78 Note ...: not applicable -1.26 1.38
1873 -0.83 -3.32 Note ...: not applicable -1.97 0.88
1874 -1.30 -3.45 Note ...: not applicable -2.64 0.39
1875 -1.71 -3.20 Note ...: not applicable -3.25 -0.05
1876 -2.04 -2.61 Note ...: not applicable -3.79 -0.39
1877 -2.30 -1.78 Note ...: not applicable -4.25 -0.63
1878 -2.46 -0.79 Note ...: not applicable -4.62 -0.73
1879 -2.55 0.25 Note ...: not applicable -4.92 -0.70
1880 -2.56 1.23 Note ...: not applicable -5.15 -0.56
1881 -2.51 2.07 Note ...: not applicable -5.33 -0.33
1882 -2.42 2.69 Note ...: not applicable -5.46 -0.06
1883 -2.33 3.05 Note ...: not applicable -5.59 0.20
1884 -2.25 3.14 Note ...: not applicable -5.72 0.39
1885 -2.22 2.99 Note ...: not applicable -5.89 0.47
1886 -2.27 2.63 8.39 -6.12 0.37
1887 -2.42 2.14 10.12 -6.42 0.07
1888 -2.69 1.59 11.28 -6.81 -0.46
1889 -3.08 1.08 11.79 -7.28 -1.24
1890 -3.59 0.68 11.60 -7.83 -2.23
1891 -4.20 0.46 10.70 -8.43 -3.42
1892 -4.90 0.45 9.17 -9.06 -4.73
1893 -5.64 0.67 7.11 -9.67 -6.11
1894 -6.37 1.11 4.67 -10.20 -7.46
1895 -7.04 1.70 2.06 -10.60 -8.70
1896 -7.59 2.38 -0.53 -10.78 -9.72
1897 -7.94 3.05 -2.86 -10.68 -10.46
1898 -8.03 3.60 -4.75 -10.24 -10.84
1899 -7.81 3.92 -6.02 -9.38 -10.81
1900 -7.23 3.92 -6.53 -8.07 -10.33
1901 -6.25 3.52 -6.22 -6.26 -9.40
1902 -4.87 2.69 -5.08 -3.95 -8.05
1903 -3.08 1.41 -3.16 -1.13 -6.31
1904 -0.91 -0.29 -0.59 2.14 -4.25
1905 1.58 -2.33 2.45 5.82 -1.95
1906 4.33 -4.60 5.73 9.81 0.48
1907 7.24 -6.98 9.00 14.00 2.97
1908 10.21 -9.31 12.00 18.26 5.39
1909 13.12 -11.43 14.45 22.42 7.68
1910 15.83 -13.19 16.12 26.32 9.74
1911 18.22 -14.46 16.84 29.80 11.53
1912 20.18 -15.13 16.47 32.68 12.99
1913 21.58 -15.13 14.97 34.80 14.11
1914 22.34 -14.44 12.35 36.01 14.87
1915 22.39 -13.08 8.72 36.20 15.30
1916 21.68 -11.11 4.25 35.27 15.41
1917 20.22 -8.65 -0.82 33.19 15.23
1918 18.01 -5.81 -6.20 29.94 14.78
1919 15.13 -2.75 -11.60 25.57 14.10
1920 11.65 0.37 -16.68 20.15 13.21
1921 7.69 3.39 -21.14 13.83 12.12
1922 3.38 6.17 -24.72 6.78 10.83
1923 -1.13 8.58 -27.20 -0.79 9.35
1924 -5.66 10.53 -28.42 -8.64 7.66
1925 -10.07 11.97 -28.31 -16.49 5.76
1926 -14.18 12.86 -26.88 -24.06 3.63
1927 -17.85 13.21 -24.20 -31.08 1.28
1928 -20.94 13.05 -20.44 -37.28 -1.28
1929 -23.37 12.44 -15.81 -42.41 -4.02
1930 -25.04 11.44 -10.58 -46.26 -6.88
1931 -25.91 10.14 -5.04 -48.66 -9.80
1932 -25.96 8.60 0.50 -49.49 -12.68
1933 -25.22 6.90 5.77 -48.69 -15.40
1934 -23.73 5.11 10.49 -46.29 -17.85
1935 -21.56 3.28 14.45 -42.34 -19.89
1936 -18.80 1.48 17.49 -36.99 -21.41
1937 -15.58 -0.25 19.50 -30.43 -22.28
1938 -12.01 -1.87 20.46 -22.90 -22.42
1939 -8.22 -3.32 20.40 -14.71 -21.78
1940 -4.34 -4.55 19.41 -6.16 -20.32
1941 -0.51 -5.50 17.62 2.40 -18.08
1942 3.17 -6.11 15.22 10.64 -15.12
1943 6.58 -6.30 12.40 18.24 -11.56
1944 9.64 -6.03 9.37 24.91 -7.53
1945 12.27 -5.23 6.31 30.39 -3.24
1946 14.41 -3.89 3.42 34.48 1.13
1947 16.03 -2.00 0.84 37.07 5.35
1948 17.10 0.39 -1.34 38.08 9.22
1949 17.60 3.19 -3.03 37.52 12.55
1950 17.56 6.26 -4.23 35.47 15.17
1951 16.97 9.40 -4.95 32.09 16.96
1952 15.89 12.38 -5.25 27.57 17.86
1953 14.34 14.93 -5.20 22.18 17.85
1954 12.38 16.76 -4.91 16.20 16.96
1955 10.07 17.59 -4.49 9.93 15.30
1956 7.49 17.17 -4.03 3.69 13.01
1957 4.71 15.29 -3.64 -2.22 10.25
1958 1.83 11.85 -3.37 -7.53 7.24
1959 -1.06 6.83 -3.28 -12.01 4.18
1960 -3.85 0.33 -3.37 -15.49 1.28
1961 -6.44 -7.41 -3.65 -17.83 -1.28
1962 -8.72 -16.03 -4.06 -19.00 -3.33
1963 -10.60 -25.06 -4.55 -18.99 -4.78
1964 -11.96 -33.92 -5.02 -17.88 -5.56
1965 -12.74 -41.96 -5.38 -15.79 -5.66
1966 -12.86 -48.54 -5.55 -12.89 -5.12
1967 -12.29 -53.01 -5.42 -9.39 -4.05
1968 -11.01 -54.80 -4.93 -5.51 -2.56
1969 -9.05 -53.46 -4.02 -1.49 -0.82
1970 -6.44 -48.72 -2.68 2.44 1.00
1971 -3.30 -40.49 -0.90 6.07 2.73
1972 0.28 -28.92 1.28 9.22 4.20
1973 4.12 -14.39 3.78 11.74 5.27
1974 8.05 2.48 6.50 13.54 5.86
1975 11.87 20.86 9.32 14.55 5.89
1976 15.38 39.77 12.08 14.77 5.37
1977 18.37 58.09 14.63 14.23 4.33
1978 20.63 74.69 16.81 13.02 2.84
1979 22.02 88.42 18.47 11.22 1.03
1980 22.38 98.26 19.46 8.98 -0.96
1981 21.63 103.37 19.68 6.42 -2.98
1982 19.74 103.14 19.04 3.70 -4.87
1983 16.72 97.26 17.50 0.95 -6.50
1984 12.66 85.74 15.05 -1.71 -7.73
1985 7.71 68.95 11.74 -4.16 -8.47
1986 2.04 47.58 7.67 -6.33 -8.68
1987 -4.08 22.65 2.96 -8.15 -8.35
1988 -10.39 -4.60 -2.22 -9.60 -7.51
1989 -16.58 -32.72 -7.66 -10.67 -6.23
1990 -22.36 -60.18 -13.13 -11.36 -4.61
1991 -27.41 -85.44 -18.39 -11.72 -2.79
1992 -31.49 -107.04 -23.21 -11.76 -0.89
1993 -34.36 -123.72 -27.34 -11.55 0.93
1994 -35.86 -134.49 -30.58 -11.13 2.56
1995 -35.88 -138.67 -32.76 -10.54 3.87
1996 -34.39 -135.96 -33.75 -9.83 4.79
1997 -31.44 -126.48 -33.45 -9.01 5.27
1998 -27.15 -110.71 -31.86 -8.12 5.30
1999 -21.71 -89.50 -29.02 -7.16 4.89
2000 -15.37 -64.03 -25.02 -6.15 4.11
2001 -8.43 -35.68 -20.02 -5.07 3.04
2002 -1.20 -6.00 -14.23 -3.94 1.77
2003 5.98 23.43 -7.90 -2.75 0.43
2004 12.78 51.04 -1.29 -1.51 -0.87
2005 18.90 75.44 5.29 -0.22 -2.03
2006 24.07 95.45 11.56 1.09 -2.96
2007 28.09 110.17 17.24 2.40 -3.60
2008 30.80 119.05 22.10 3.69 -3.90
2009 32.14 121.89 25.94 4.90 -3.87
2010 32.11 118.85 28.61 6.00 -3.51
2011 30.77 110.42 30.04 6.94 -2.88
2012 28.25 97.38 30.20 7.70 -2.04
2013 24.75 80.74 29.14 8.22 -1.07
2014 20.50 61.64 26.98 8.50 -0.06
2015 15.75 41.31 23.89 8.52 0.91

Across the sub-indexes of the long-run real BCPI, the super-cycle components display some synchronicity. The peaks and troughs of the super cycles for agriculture and forestry often occur around the same time, although their amplitudes can be quite different. The super cycles for metals and minerals occur around the same time as those for agriculture and forestry in the first and final cycles, but behave differently from the 1930s to the 1960s. The energy super cycle in the first half of the period is negatively correlated with those for the other sub-indexes, but all sub-indexes become positively correlated in the second half of the period. The change in behaviour coincides with an increase in the amplitude of the energy cycle.

#### 4.4.5 Commodity price changes in Canada

The long-run BCPI measures price changes in U.S. dollars for commodities important for Canada. Therefore, it does not reflect price changes relevant to Canadian producers when the U.S.–Canada exchange rate changes. For most of the period in question, Canada has had an exchange rate with the United States that is at or near parity. However, during the last 40 years, in the post-Bretton Woods period, Canada had a floating exchange rate. This creates a divergence between the change in the price on world markets and the change in the price relevant to Canadian producers. To illustrate this point and the different behaviour of the post-Bretton Woods period, the long-run real BCPI is presented in terms of U.S. and Canadian dollars in Chart 15.

Data table for Chart 15
Data table for Chart 15
Table summary
This table displays the results of Data table for Chart 15. The information is grouped by Year (appearing as row headers), BCPI (CAN$) / PFDE Canada and BCPI (US$) / PFDE United States, calculated using index units of measure (appearing as column headers).
Year BCPI (CAN$) / PFDE Canada BCPI (US$) / PFDE United States
index
1870 155.3 128.8
1871 134.8 113.6
1872 118.0 112.4
1873 126.3 121.4
1874 132.0 125.2
1875 126.3 124.0
1876 122.2 121.4
1877 122.1 110.6
1878 114.0 103.7
1879 117.4 109.1
1880 128.9 117.4
1881 147.0 140.6
1882 121.3 119.1
1883 116.5 117.4
1884 118.5 110.5
1885 117.7 113.8
1886 112.2 108.2
1887 112.5 114.8
1888 120.3 116.7
1889 95.1 95.1
1890 117.2 117.7
1891 107.2 108.2
1892 105.3 107.4
1893 108.7 107.9
1894 109.8 104.6
1895 102.5 97.5
1896 100.8 98.6
1897 111.5 112.2
1898 99.9 102.2
1899 105.8 104.4
1900 108.8 110.1
1901 114.7 116.7
1902 112.0 115.9
1903 110.5 113.8
1904 103.5 106.5
1905 103.9 108.3
1906 104.6 107.7
1907 109.6 116.0
1908 112.1 122.6
1909 115.8 128.0
1910 112.5 120.5
1911 114.4 126.0
1912 106.2 118.6
1913 111.2 126.4
1914 116.2 129.8
1915 109.5 122.9
1916 134.2 152.3
1917 153.0 173.0
1918 144.0 154.9
1919 147.0 148.4
1920 122.6 113.2
1921 95.6 91.4
1922 88.7 90.8
1923 87.7 87.9
1924 100.4 99.3
1925 116.0 113.7
1926 106.0 103.6
1927 104.4 102.3
1928 92.3 91.7
1929 100.0 100.0
1930 83.2 85.0
1931 68.0 70.3
1932 69.9 68.1
1933 84.0 85.4
1934 86.7 93.4
1935 97.2 101.1
1936 105.6 112.0
1937 101.8 106.3
1938 89.2 94.6
1939 96.1 99.6
1940 95.6 96.6
1941 104.0 107.0
1942 111.7 111.6
1943 123.6 122.1
1944 122.3 120.5
1945 123.7 121.5
1946 140.4 130.0
1947 151.7 144.5
1948 134.7 135.3
1949 121.9 127.6
1950 133.2 132.3
1951 124.8 136.7
1952 115.7 134.0
1953 110.6 126.6
1954 108.9 126.8
1955 110.5 122.5
1956 106.4 121.0
1957 101.8 118.9
1958 102.2 117.4
1959 99.0 115.3
1960 98.5 113.4
1961 102.7 112.9
1962 108.0 112.8
1963 104.6 109.4
1964 98.6 104.2
1965 97.8 105.1
1966 98.4 107.9
1967 92.3 102.7
1968 90.3 100.8
1969 91.6 102.4
1970 88.7 101.1
1971 83.2 98.3
1972 86.3 105.1
1973 104.9 129.6
1974 117.4 151.9
1975 113.2 143.8
1976 102.9 138.9
1977 103.7 131.3
1978 112.4 133.4
1979 126.7 146.6
1980 138.3 159.6
1981 134.5 155.0
1982 117.3 136.5
1983 111.1 132.0
1984 109.9 124.5
1985 102.1 110.5
1986 85.8 93.1
1987 87.8 101.0
1988 85.2 106.4
1989 81.9 106.8
1990 77.9 102.9
1991 66.9 90.6
1992 69.5 88.9
1993 74.1 88.2
1994 78.8 88.4
1995 83.1 92.2
1996 86.4 96.1
1997 82.2 90.2
1998 73.3 75.8
1999 79.1 81.2
2000 97.5 100.1
2001 88.3 86.8
2002 83.0 81.0
2003 87.8 95.7
2004 97.1 112.9
2005 111.8 137.6
2006 108.1 141.1
2007 106.8 146.5
2008 125.5 172.5
2009 89.2 116.1
2010 97.2 139.8
2011 107.6 160.8
2012 99.8 148.2
2013 101.8 145.9
2014 105.1 140.9
2015 78.7 89.8

As Chart 15 illustrates, the change in relative commodity prices as measured by the long-run real BCPI is essentially the same in U.S. dollars and Canadian dollars between 1870 and 1970. This is a result of having an exchange rate regime that was, for the most part, fixed at parity with the U.S. dollar, or that remained within about 10 cents of parity during periods when it was floating. The post-Bretton Woods period, however, saw a depreciation of the exchange rate through the 1980s and 1990s to reach \$0.636 in 2002, before climbing above parity in the late 2000s.

These exchange-rate movements had the effect of dampening differences in commodity price growth across the years, consistent with the expectation that a floating exchange rate acts as a shock absorber for foreign shocks. As a result, real commodity price changes in Canadian dollar terms are more muted in Canada than in the United States under the current exchange-rate regime. Consequently, the force of commodity price changes in global markets does not exert as much short-run relative price pressure in Canada as it does in the United States.

## 5 Conclusion

Historical estimates for the BCPI and its sub-indexes have been produced for the period from 1870 to 1971 to link with the current BCPI. The estimated values reflect important historical events, from major economic shocks to the emergence of oil production and the electrification of the production process. Therefore, they contain information relevant for understanding processes related to emerging commodity production and structural change.

They also contain significant information about the timing of pressure exerted by commodity prices in Canada. The long-run BCPI, which links historical estimates to the BCPI, correlates with export prices and wholesale prices, suggesting that the magnitude and timing of events captured by the long-run index are appropriate. However, because the BCPI is chain-weighted, it more accurately measures growth rates than historical fixed-weight sources.

The long-run BCPI and its sub-indexes have growth-rate distributions characterized by skewness and kurtosis relative to a normal distribution. They are, in other words, subject to large innovations, with positive innovations being relatively larger. As a result, measures of average growth, variance, correlation, covariance and regression estimators, such as ordinary least squares, are biased because of the presence of these influential observations. The extent to which this may create problems for analysis and modelling depends on the use to which the data are put.

The long-run BCPI, its sub-indexes and the prices used to construct them also show a process of short periods of pressure, followed by periods of calm. This super-cycle-type pattern is most pronounced in the real long-run BCPI after the end of the classical gold standard at the outbreak of the First World War and often coincides with major changes in monetary regime.

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