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Short-Run and Long-Run News: Evidence from Giant Commodity Discoveries

Author

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  • Jean-Paul L'Huillier
  • Kirill Shakhnov
  • Laure Simon

Abstract

The bulk of the news shocks literature focuses on shocks materializing after four or five quarters, with limited evidence on news about longer-run events. We build a new dataset of discovery and production start dates for a wide range of giant commodity discoveries worldwide from 1960 to 2012. Standard open economy models match the empirical responses of short-run news but fail in the case of long-run news. Incorporating financial frictions in the form of collateral constraints is crucial for capturing the dynamics implied by long-run news. We also provide direct evidence on the role of these frictions.

Suggested Citation

  • Jean-Paul L'Huillier & Kirill Shakhnov & Laure Simon, 2025. "Short-Run and Long-Run News: Evidence from Giant Commodity Discoveries," Staff Working Papers 25-24, Bank of Canada.
    • Handle: RePEc:bca:bocawp:25-24
    DOI: 10.34989/swp-2025-24
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    References listed on IDEAS

    as
    1. Uribe, Martin & Yue, Vivian Z., 2006. "Country spreads and emerging countries: Who drives whom?," Journal of International Economics, Elsevier, vol. 69(1), pages 6-36, June.
    2. Neumeyer, Pablo A. & Perri, Fabrizio, 2005. "Business cycles in emerging economies: the role of interest rates," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 345-380, March.
    3. Wang, Wencheng & Ning, Zinan & Shu, Yang & Riti, Joshua Sunday & Riti, Miriam-Kamah J., 2023. "Natural resource rents and public debts nexus in African resource-rich and most indebted nations: Issues with aggregation bias," Resources Policy, Elsevier, vol. 82(C).
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    Keywords

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    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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