Paper Title
How Are International Commodity Prices Affected by U.S. Dollar Exchange Rate

Abstract
Since the 21st century, the international commodity prices have experienced an unprecedented volatility. Since U.S. Dollar is the pricing and settlement currency of world's major commodities, the impact of its exchange rate on commodity prices is particularly important. This paper firstly analyzes the existing studies to obtain a basic proposition: In the long run, the exchange rate of dollar shows an obvious negative correlation with commodity prices. Then in the part of empirical study, the paper test the relationship between the exchange rate of dollar and prices of different types of international commodities by VECM model basing on monthly data from the year of 2000 to 2013. The results confirmed that the exchange rate of dollar is not always the reason for changes of commodity prices, and that these two variables are simultaneous results of changes in macroeconomic. In addition, the paper attempt to explain the mechanism behind the effects and proposes policy suggestions. Index Terms—international commodity price, dollar's real effective exchange rate, VECM model