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

Jean-Paul L'Huillier, Kirill Shakhnov and Laure Simon

Staff Working Papers from Bank of Canada

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.

Keywords: Business fluctuations and cycles; International topics (search for similar items in EconPapers)
JEL-codes: E23 F3 F4 Q33 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2025-09
New Economics Papers: this item is included in nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:25-24

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