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Chinese Resource Demand and the Natural Resource Supplier

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  • Mardi Dungey
  • Renée Fry-McKibbin
  • Verity Linehan

Abstract

This paper 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 resources exports sector. The key findings of the paper 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 resources sector. However, these shocks eventually lead to lower real domestic output with factors of production moving out of the non-resources sectors and into the resources sector, resulting in a fall in nonresource sector output which is not fully offset by the rise in resources sector output. The results also indicate some market power by the natural resource supplier.

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File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2013-08/54_2013_dungey_frymckibbin_linehan.pdf
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Bibliographic Info

Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-54.

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Length: 27 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:een:camaaa:2013-54

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Cited by:
  1. Ratti, Ronald A. & Vespignani, Joaquin L., 2013. "Commodity Prices and BRIC and G3 Liquidity: A SFAVEC Approach," MPRA Paper 49324, University Library of Munich, Germany.
  2. 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.
  3. Vespignani, Joaquin L. & Knop, Stephen J, 2014. "The sectorial impact of commodity price shocks in Australia," MPRA Paper 55435, University Library of Munich, Germany.

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