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Chinese Resource Demand and the Natural Resource Supplier

Author

Listed:
  • 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.

Suggested Citation

  • Mardi Dungey & Renée Fry-McKibbin & Verity Linehan, 2013. "Chinese Resource Demand and the Natural Resource Supplier," CAMA Working Papers 2013-54, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2013-54
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    More about this item

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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