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With the financialization of commodity markets, international interest rates are now considered as being a key determinant of commodity prices. With this evidence in mind, this paper reconsiders the macroeconomic adjustment of small open commodity exporting countries to international monetary shocks. We proceed by building a model of a small open economy that produces a non-tradable good and a storable tradable commodity. The difference with standard models of small open economies lies in the endogenous response of commodity prices which, due to commodity storage, adjust to variations in international interest rates. We find that the endogenous response of commodity prices amplies the response of commodity exporting countries to international monetary shocks. This suggests that commodity exporting countries are more vulnerable to unfavourable international monetary disturbances than other small open economies. In particular, because of the existence of the commodity price channel, even those small open commodity exporting economies that are disconnected from international financial markets can be affected by international financial shocks.
