A Barrel of Oil or a Bottle of Wine: How Do Global Growth Dynamics Affect Commodity Prices?
AbstractThis paper investigates the causes of extreme fluctuations in commodity prices from 1990 to 2010. Analyzing two very distinct commodities-crude oil and fine wine, we find that macroeconomic factors are the main determinants of commodity prices. Although supply constraints have the expected effect, aggregate demand growth is the key factor. The empirical results show that while advanced economies account for more than half of global consumption, emerging economies make up the bulk of the incremental change in demand, thereby having a greater weight in commodity price formation. The results also show that the shift in the composition of aggregate commodity demand is a recent phenomenon.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/1.
Date of creation: 01 Jan 2011
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This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-02-26 (Agricultural Economics)
- NEP-ALL-2011-02-26 (All new papers)
- NEP-CWA-2011-02-26 (Central & Western Asia)
- NEP-ENE-2011-02-26 (Energy Economics)
- NEP-OPM-2011-02-26 (Open Economy Macroeconomic)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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