Non-Renewable Resource Extraction over the Long Term: Empirical Evidence from Global Copper Production

Stuermer, Martin (2022): Non-Renewable Resource Extraction over the Long Term: Empirical Evidence from Global Copper Production.

Abstract

Global mine production of copper has risen more than 80 times over the last 135 years. What were the main drivers? I examine this question based on copper market data from 1880 to 2020. I employ a structural time series model with sign restrictions to identify demand and supply shocks. I find that a deterministic trend drove most of the increase in the level of copper output. At the same time, unpredictable demand and supply shocks caused substantial fluctuations around the trend. A global commodity demand shock that is, for example, linked to a three percent unexpected expansion of the global economy due to rapid industrialization causes a ten percent rise in the real copper price, incentivizing a five percent increase in global copper production. The paper provides empirical evidence for the feedback control cycle of mineral supply.

• Item Type: MPRA Paper
• Language: English
• Keywords: Structural vector autoregression, copper production, non-renewable resources, metals.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries; 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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