IDEAS home Printed from https://ideas.repec.org/a/eee/recore/v60y2012icp10-19.html
   My bibliography  Save this article

Exploring the usefulness of a simple linear regression model for understanding price movements of selected recycled materials in the UK

Author

Listed:
  • Angus, A.
  • Casado, M. Rivas
  • Fitzsimons, D.

Abstract

The price volatility of recycled materials exposes many different organisations to financial and regulatory risk. These risks can be partially mitigated by improved understanding of price volatility using econometric models, although these have tended to be sophisticated autoregressive models, beyond the analytical capability or cost structure of the average market participant. In this context, this study explores the use of a simple linear regression model to understand the behaviour of prices for recycled plastic, recovered paper and glass, based on the price of their primary inputs, with a specific focus on the UK market. The results of the simple regression model are compared with a wavelet analysis to determine what information is lost in the trade off with simplicity. Both models found significant relationships between the price of crude oil/ethylene/naphtha and recycled plastics and it appears that there is no loss in model performance by using oil as the explanatory variable, rather than direct inputs (ethylene/naphtha). However, few correlations were found for recovered paper and glass. Initial findings from the wavelet analysis suggest that since 2004 the oil price has become more closely linked to the price of recycled plastics. It must be noted that this study is exploratory and particular dynamics of UK markets for recycled materials may affect price development in a way that would not be repeated on international markets.

Suggested Citation

  • Angus, A. & Casado, M. Rivas & Fitzsimons, D., 2012. "Exploring the usefulness of a simple linear regression model for understanding price movements of selected recycled materials in the UK," Resources, Conservation & Recycling, Elsevier, vol. 60(C), pages 10-19.
    • Handle: RePEc:eee:recore:v:60:y:2012:i:c:p:10-19
    DOI: 10.1016/j.resconrec.2011.10.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921344911002229
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resconrec.2011.10.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Xiarchos, Irene M. & Fletcher, Jerald J., 2009. "Price and volatility transmission between primary and scrap metal markets," Resources, Conservation & Recycling, Elsevier, vol. 53(12), pages 664-673.
    2. Schlueter, Stephan, 2010. "A long-term/short-term model for daily electricity prices with dynamic volatility," Energy Economics, Elsevier, vol. 32(5), pages 1074-1081, September.
    3. Alwaeli, Mohamed, 2010. "The impact of product charges and EU directives on the level of packaging waste recycling in Poland," Resources, Conservation & Recycling, Elsevier, vol. 54(10), pages 609-614.
    4. Rua, António, 2010. "Measuring comovement in the time-frequency space," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 685-691, June.
    5. Rua, António & Nunes, Luís C., 2009. "International comovement of stock market returns: A wavelet analysis," Journal of Empirical Finance, Elsevier, vol. 16(4), pages 632-639, September.
    6. Blomberg, Jerry & Söderholm, Patrik, 2009. "The economics of secondary aluminium supply: An econometric analysis based on European data," Resources, Conservation & Recycling, Elsevier, vol. 53(8), pages 455-463.
    7. Masih, Mansur & Algahtani, Ibrahim & De Mello, Lurion, 2010. "Price dynamics of crude oil and the regional ethylene markets," Energy Economics, Elsevier, vol. 32(6), pages 1435-1444, November.
    8. Johnson, Jeremiah & Reck, B.K. & Wang, T. & Graedel, T.E., 2008. "The energy benefit of stainless steel recycling," Energy Policy, Elsevier, vol. 36(1), pages 181-192, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Selmi, Refk & Hammoudeh, Shawkat & Kasmaoui, Kamal & Sousa, Ricardo M. & Errami, Youssef, 2022. "The dual shocks of the COVID-19 and the oil price collapse: A spark or a setback for the circular economy?," Energy Economics, Elsevier, vol. 109(C).
    2. Zhao, Jue & Hosseini, Shahab & Chen, Qinyang & Jahed Armaghani, Danial, 2023. "Super learner ensemble model: A novel approach for predicting monthly copper price in future," Resources Policy, Elsevier, vol. 85(PB).
    3. Fu, Xinkai & Ueland, Stian M. & Olivetti, Elsa, 2017. "Econometric modeling of recycled copper supply," Resources, Conservation & Recycling, Elsevier, vol. 122(C), pages 219-226.
    4. John Ryter & Xinkai Fu & Karan Bhuwalka & Richard Roth & Elsa Olivetti, 2022. "Assessing recycling, displacement, and environmental impacts using an economics‐informed material system model," Journal of Industrial Ecology, Yale University, vol. 26(3), pages 1010-1024, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zied Ftiti & Aviral Tiwari & Amél Belanès & Khaled Guesmi, 2015. "Tests of Financial Market Contagion: Evolutionary Cospectral Analysis Versus Wavelet Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 46(4), pages 575-611, December.
    2. Samia Nasreen & Syed Asif Ali Naqvi & Aviral Kumar Tiwari & Shawkat Hammoudeh & Syed Ale Raza Shah, 2020. "A Wavelet-Based Analysis of the Co-Movement between Sukuk Bonds and Shariah Stock Indices in the GCC Region: Implications for Risk Diversification," JRFM, MDPI, vol. 13(4), pages 1-21, March.
    3. Lin, Fu-Lai & Chen, Yu-Fen & Yang, Sheng-Yung, 2016. "Does the value of US dollar matter with the price of oil and gold? A dynamic analysis from time–frequency space," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 59-71.
    4. Rua, António, 2017. "A wavelet-based multivariate multiscale approach for forecasting," International Journal of Forecasting, Elsevier, vol. 33(3), pages 581-590.
    5. Gonçalo Faria & Fabio Verona, 2016. "Forecasting the equity risk premium with frequency-decomposed predictors," Working Papers de Economia (Economics Working Papers) 06, Católica Porto Business School, Universidade Católica Portuguesa.
    6. repec:zbw:bofrdp:2018_007 is not listed on IDEAS
    7. Mutascu, Mihai & Sokic, Alexandre, 2023. "Air transportation under COVID-19 pandemic restrictions: A wavelet analysis," Transport Policy, Elsevier, vol. 139(C), pages 155-181.
    8. repec:ipg:wpaper:2014-441 is not listed on IDEAS
    9. Fu, Xinkai & Ueland, Stian M. & Olivetti, Elsa, 2017. "Econometric modeling of recycled copper supply," Resources, Conservation & Recycling, Elsevier, vol. 122(C), pages 219-226.
    10. Gozgor, Giray & Tiwari, Aviral Kumar & Demir, Ender & Akron, Sagi, 2019. "The relationship between Bitcoin returns and trade policy uncertainty," Finance Research Letters, Elsevier, vol. 29(C), pages 75-82.
    11. Ftiti, Zied & Fatnassi, Ibrahim & Tiwari, Aviral Kumar, 2016. "Neoclassical finance, behavioral finance and noise traders: Assessment of gold–oil markets," Finance Research Letters, Elsevier, vol. 17(C), pages 33-40.
    12. Baruník, Jozef & Kočenda, Evžen & Vácha, Lukáš, 2016. "Gold, oil, and stocks: Dynamic correlations," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 186-201.
    13. Kang, Sang Hoon & Tiwari, Aviral Kumar & Albulescu, Claudiu Tiberiu & Yoon, Seong-Min, 2019. "Time-frequency co-movements between the largest nonferrous metal futures markets," Resources Policy, Elsevier, vol. 61(C), pages 393-398.
    14. Chaker Aloui & Rania Jammazi & Hela Ben Hamida, 2018. "Multivariate Co-movement Between Islamic Stock and Bond Markets Among the GCC: A Wavelet-Based View," Computational Economics, Springer;Society for Computational Economics, vol. 52(2), pages 603-626, August.
    15. R. Khalfaoui & M. Boutahar, 2012. "Portfolio Risk Evaluation: An Approach Based on Dynamic Conditional Correlations Models and Wavelet Multi-Resolution Analysis," Working Papers halshs-00793068, HAL.
    16. Su, Chi-Wei & Khan, Khalid & Tao, Ran & Nicoleta-Claudia, Moldovan, 2019. "Does geopolitical risk strengthen or depress oil prices and financial liquidity? Evidence from Saudi Arabia," Energy, Elsevier, vol. 187(C).
    17. Rua, António & Nunes, Luis C., 2012. "A wavelet-based assessment of market risk: The emerging markets case," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(1), pages 84-92.
    18. Qureshi, Saba & Rehman, Ijaz Ur & Qureshi, Fiza, 2018. "Does gold act as a safe haven against exchange rate fluctuations? The case of Pakistan rupee," Journal of Policy Modeling, Elsevier, vol. 40(4), pages 685-708.
    19. Gonçalo Faria & Fabio Verona, 2016. "Forecasting the equity risk premium with frequency-decomposed predictors," Working Papers de Economia (Economics Working Papers) 06, Católica Porto Business School, Universidade Católica Portuguesa.
    20. António Rua, 2011. "A wavelet approach for factor‐augmented forecasting," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 30(7), pages 666-678, November.
    21. Jens J. Krüger, 2021. "A Wavelet Evaluation of Some Leading Business Cycle Indicators for the German Economy," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 17(3), pages 293-319, December.
    22. Faria, Gonçalo & Verona, Fabio, 2018. "Forecasting stock market returns by summing the frequency-decomposed parts," Journal of Empirical Finance, Elsevier, vol. 45(C), pages 228-242.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:recore:v:60:y:2012:i:c:p:10-19. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kai Meng (email available below). General contact details of provider: https://www.journals.elsevier.com/resources-conservation-and-recycling .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.