ZEW Research Seminar
150 Years of Boom and Bust. What Drives Mineral Commodity Prices?
- Martin Stürmer (Universität Bonn)
This paper examines the dynamic effects of demand and supply shocks on
mineral commodity prices. It provides empirical insights by using annual data
for the copper, lead, crude oil, tin and zinc markets from 1840 to 2010.
Long-term price fluctuations are mainly driven by persistent aggregate and
market-specific demand shocks. Supply shocks exhibit importance in the tin
and copper markets due to oligopolistic structures. Results for the price of
crude oil are not robust to different sub-periods due to structural changes.
At the same time, aggregate demand shocks have persistent and strong positive
effects on mineral production. This suggests that rapid industrialization in
China and other emerging economies may cause prices to return to their
declining or stable trends in the long run.
Location of the Event
ZEW, L 7,1 D-68161 Mannheim