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150 Years of Boom and Bust: What Drives Mineral Commodity Prices?

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  • Stuermer, Martin

Abstract

My paper is the first to provide long-run evidence on the dynamic effects of supply and demand shocks on mineral commodity prices. I assemble and analyze a new data set of prices and production levels of copper, lead, tin, zinc, and crude oil from 1840 to 2010. Price fluctuations are primarily driven by demand rather than supply shocks. Demand shocks affect the price persistently for up to 15 years, whereas the effect of supply shocks persists for a maximum of 5 years. My paper shows that price surges caused by rapid industrialization are a recurrent phenomenon throughout history. Mineral commodity prices return to their declining or stable trends in the long run.

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  • Stuermer, Martin, 2013. "150 Years of Boom and Bust: What Drives Mineral Commodity Prices?," MPRA Paper 51859, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51859
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    More about this item

    Keywords

    Mineral Commodity Markets; Metals; Oil; Prices; Non-renewable resources; Structural VAR;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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