Commodity Prices and the US Business Cycle

Matthew van der Nest and Gary van Vuuren ()
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Matthew van der Nest: School of Business and Economics, Maastricht University, 6211 LM Maastricht, The Netherlands
Gary van Vuuren: Centre for Business Mathematics and Informatics, North-West University, Potchefstroom Campus, Potchefstroom 2351, South Africa

JRFM, 2023, vol. 16, issue 10, 1-21

Abstract: This article explores the relationship between commodity price cycles and the US business cycle. Commodity price cycles are known to foster capricious macroeconomic activity, and understanding their behaviour offers valuable economic insight. The US business cycle is a key indicator of the broader economic conditions, reflecting changes in economic activity, consumer spending, and overall market conditions. By examining the dynamics and interplay between these two cycles, this study provides insights into the potential synchronisation, lag, or lead between commodity price cycles and the US business cycle. The study employs a Fourier analysis of commodity price cycles and the US business cycle. In addition, the same empirical method will be used to analyse historical rainfall patterns in the US as a means of furthering the role of historical rainfall patterns in shaping agricultural productivity and subsequent price movements. Results show dominant cycles of 14.2 years throughout the commodity price dataset, 3.8 years within the US business cycle, and 14.2 years in US historical rainfall patterns. The study also identifies several factors that influence the relationship between these two cycles, including global demand, trade policies, and financial market fluctuations.

Keywords: commodities; business cycle; Fourier; macroeconomic (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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