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What drives commodity price booms and busts?

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  • Jacks, David S.
  • Stuermer, Martin

Abstract

We provide evidence on the dynamic effects of aggregate commodity demand shocks, commodity supply shocks, and storage demand or other commodity-specific demand shocks on real commodity prices. We analyze a new data set of price and production levels for 12 agricultural goods, metals, and soft commodities from 1870 to 2013. We establish that commodity demand shocks strongly dominate commodity supply shocks in driving prices over a broad set of commodities and over a long period of time. While commodity demand shocks have gained importance over time, commodity supply shocks have become less relevant.

Suggested Citation

  • Jacks, David S. & Stuermer, Martin, 2020. "What drives commodity price booms and busts?," Energy Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988318301907
    DOI: 10.1016/j.eneco.2018.05.023
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    More about this item

    Keywords

    Commodity prices; Natural resources; Structural VAR;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • 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)
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative

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