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Chinese resource demand and the natural resource supplier

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  • Mardi Dungey
  • Renee Fry-McKibbin
  • Verity Linehan

Abstract

This article provides empirical evidence on the effects of Chinese resource demand on the resource-rich natural resource supplier using the example of Australia. A structural VAR model is used to examine the effects of Chinese resource demand, commodity prices and foreign output on the macroeconomy with a formally specified mining and resource export sector. The key findings of the article are that shocks to Chinese demand and commodity prices result in a sustained increase in commodity prices and mining investment and a positive impact on the resource sector. However, these shocks eventually lead to lower real domestic output with factors of production moving out of the nonresource sectors and into the resource sector, resulting in a fall in nonresource sector output which is not fully offset by the rise in resource sector output. The results also indicate some market power by the natural resource supplier.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 46 (2014)
Issue (Month): 2 (January)
Pages: 167-178

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Handle: RePEc:taf:applec:v:46:y:2014:i:2:p:167-178

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Cited by:
  1. Stephen J. Knop & Joaquin L. Vespignani, 2014. "The sectorial impact of commodity price shocks in Australia," CAMA Working Papers 2014-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. Ratti, Ronald A & Vespignani, Joaquin L., 2013. "Commodity Prices and BRIC and G3 Liquidity: A SFAVEC Approach," Working Papers 17096, University of Tasmania, School of Economics and Finance, revised 09 Jan 2013.
  3. Dungey, Mardi & Osborne, Denise, 2013. "International Transmissions to Australia: The Roles of the US and Euro Area," Working Papers 17208, University of Tasmania, School of Economics and Finance, revised 16 Oct 2013.

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