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Your friend Mark is a consultant specialized on emerging markets. He has been asked to write a report on recent trends on the prices of
Your friend Mark is a consultant specialized on emerging markets. He has been asked to write a report on recent trends on the prices of several commodities. The price of rubber has increased by 20% in the last 2 years, and Mark wishes to understand whether rubber prices are expected to be at this high level in the future, or whether they will revert back to their 2014 level. Mark is not an expert in this market, and he asks for your help. You tell Mark that unfortunately there are no survey data he can use. However, you suggest to him that he could assess whether the market thinks that the change in the price of rubber is permanent or transitory by looking at the evolution of the current account in Ivory Coast (a major rubber producer) over the 2014-2016 period. Explain the logic of your suggestion
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