Hotelling Rules: Oscillatory Versus Quadratic Trends in Natural Resource Prices

Antypas, Antonios and Koundouri, Phoebe and Kourogenis, Nikolaos (2013): Hotelling Rules: Oscillatory Versus Quadratic Trends in Natural Resource Prices. Published in:

Abstract

A model is introduced for the description of natural resources price paths, which, in contrast to the existing literature, captures non-linear trends by means of a simple trigonometric function. This model is then compared by means of a set of model selection criteria with a quadratic trend model and with a more general one that nests both models. All models are estimated on the price series of eleven major natural resources. In most cases, the trigonometric trend model is selected as the one better fitting the data, providing evidence against the long-run increase of the corresponding natural resource real prices, with interesting policy implications.

• Item Type: MPRA Paper
• Language: English
• Keywords: Oscillatory trend, quadratic trend, Hotelling rule, natural resource prices, model selection
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy; Y - Miscellaneous Categories > Y1 - Data: Tables and Charts

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