150 Years of Boom and Bust: What Drives Mineral Commodity Prices?

Stuermer, Martin (2013): 150 Years of Boom and Bust: What Drives Mineral Commodity Prices?

Abstract

My paper is the first to provide long-run evidence on the dynamic effects of supply and demand shocks on mineral commodity prices. I assemble and analyze a new data set of prices and production levels of copper, lead, tin, zinc, and crude oil from 1840 to 2010. Price fluctuations are primarily driven by demand rather than supply shocks. Demand shocks affect the price persistently for up to 15 years, whereas the effect of supply shocks persists for a maximum of 5 years. My paper shows that price surges caused by rapid industrialization are a recurrent phenomenon throughout history. Mineral commodity prices return to their declining or stable trends in the long run.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mineral Commodity Markets, Metals, Oil, Prices, Non-renewable resources, Structural VAR
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General; N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries > N50 - General, International, or Comparative; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q31 - Demand and Supply ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q33 - Resource Booms

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