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Commodity Price Shocks and the Australian Economy since Federation

Author

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  • Sambit Bhattacharyya
  • Jeffrey G Williamson

Abstract

Australia has experienced frequent and large commodity export price shocks like Third World commodity exporters, but this price volatility has had much more modest impact on economic performance. Why? This paper explores Australian terms of trade volatility since 1901. It identifies two major price shock episodes before the recent mining-led boom and bust. It assesses their relative magnitude, their de-industrialization and distributional impact during the booms, and their labour market and policy responses throughout. Australia has indeed responded differently to volatile commodity prices than have other commodity exporters.

Suggested Citation

  • Sambit Bhattacharyya & Jeffrey G Williamson, 2010. "Commodity Price Shocks and the Australian Economy since Federation," OxCarre Working Papers 041, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    • Handle: RePEc:oxf:oxcrwp:041
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    2. Tim Robinson & Tim Atkin & Mark Caputo & Hao Wang, 2017. "Macroeconomic Consequences of Terms of Trade Episodes, Past and Present," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 57(3), pages 291-315, November.
    3. Sambit Bhattacharyya & Jeffrey G. Williamson, 2016. "Distributional Consequences of Commodity Price Shocks: Australia Over A Century," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(2), pages 223-244, June.
    4. Ian Keay, 2010. "The Impact Of Commodity Price Volatility On Resource Intensive Economies," Working Paper 1274, Economics Department, Queen's University.
    5. Sambit Bhattacharyya & Jeffrey G Williamson, 2013. "Distributional Impact of Commodity Price Shocks: Australia over a century," OxCarre Working Papers 117, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    6. Kenneth Clements & Liang Li, 2017. "Understanding resource investments," Applied Economics, Taylor & Francis Journals, vol. 49(20), pages 1950-1962, April.
    7. Alsharif, Nouf & Bhattacharyya, Sambit & Intartaglia, Maurizio, 2017. "Economic diversification in resource rich countries: History, state of knowledge and research agenda," Resources Policy, Elsevier, vol. 52(C), pages 154-164.
    8. World Bank, 2024. "Global Economic Prospects, January 2024," World Bank Publications - Books, The World Bank Group, number 40715, April.
    9. Leandro Medina, 2010. "The Dynamic Effects of Commodity Prices on Fiscal Performance in Latin America," IMF Working Papers 2010/192, International Monetary Fund.
    10. Laura Panza & Jeffrey G. Williamson, 2017. "Australian Squatters, Convicts, and Capitalists: Dividing Up a Fast-Growing Frontier Pie 1821-1871," CEH Discussion Papers 02, Centre for Economic History, Research School of Economics, Australian National University.
    11. Kenneth W. Clements & Jiawei Si & Thomas Simpson, 2016. "Understanding New Resource Projects," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 584-600, September.
    12. Sambit Bhattacharyya, 2020. "A History of Global Capitalism: Feuding Elites and Imperial Expansion," Working Paper Series 1020, Department of Economics, University of Sussex Business School.
    13. Ian W. McLean, 2010. "Responding to Shocks: Australia's Institutions and Policies," School of Economics and Public Policy Working Papers 2010-30, University of Adelaide, School of Economics and Public Policy.
    14. Bhattacharyya, Sambit, 2011. "Five Centuries of Economic Growth in India: The Institutions Perspective," MPRA Paper 67901, University Library of Munich, Germany.
    15. Sambit Bhattacharyya, 2011. "Growth Miracles and Growth Debacles," Books, Edward Elgar Publishing, number 13609.
    16. Andrew J. Seltzer, 2021. "Globalisation, migration, trade and growth: Honouring the contribution of Jeff Williamson to Australian and Asia‐Pacific economic history—Guest Editor's introduction," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(2), pages 128-135, July.
    17. Medina, Leandro, 2010. "A Commodity Curse? The Dynamic Effects of Commodity Prices on Fiscal Performance in Latin America," MPRA Paper 21690, University Library of Munich, Germany.
    18. Kenneth W. Clements & Liang Li, 2014. "Valuing Resource Investments," Economics Discussion / Working Papers 14-27, The University of Western Australia, Department of Economics.
    19. Sambit Bhattacharyya & Jeffrey G. Williamson, 2011. "Commodity Price Shocks And The Australian Economy Since Federation," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 51(2), pages 150-177, July.
    20. Sambit Bhattacharyya, 2021. "Commodity boom‐bust cycles and the resource curse in Australia: 1900 to 2007," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(2), pages 186-203, July.
    21. Hélène Ehrhart & Samuel Guérineau, 2012. "Commodity price volatility and Tax revenues: Evidence from developing countries," CERDI Working papers halshs-00658210, HAL.
    22. Batten, Jonathan A. & Ciner, Cetin & Lucey, Brian M., 2010. "The macroeconomic determinants of volatility in precious metals markets," Resources Policy, Elsevier, vol. 35(2), pages 65-71, June.
    23. Francisco Arroyo Marioli & Garima Vasishtha, 2025. "Fiscal Policy Procyclicality and Volatility in Commodity-Exporting Emerging and Developing Economies : Determinants and Implications for Growth," Policy Research Working Paper Series 11037, The World Bank.

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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