Distributional Impact of Commodity Price Shocks: Australia over a Century

Sambit Bhattacharyya and Jeffrey Williamson

No 19, CEH Discussion Papers from Centre for Economic History, Research School of Economics, Australian National University

Abstract: This paper explores the distributional impact of commodity price shocks over the both the short and very long run. Using a GARCH model, we find that Australia experienced more volatility than many commodity exporting poor countries between 1865 and 2007. A single equation error correction model suggests that commodity price shocks increase the income share of the top 1, 0.05, and 0.01 percent in the short run. The very top end of the income distribution benefits from commodity booms disproportionately more than the rest of society. The short run effect is mainly driven by wool and mining and not agricultural commodities. A sustained increase in the price of renewables (wool) reduces inequality whereas the same for non-renewable resources (minerals) increases inequality. We expect that the initial distribution of land and mineral resources explains the asymmetric result.

Keywords: Australia; commodity exporters; commodity price shocks and income inequality (search for similar items in EconPapers)
JEL-codes: F14 F43 N17 O13 (search for similar items in EconPapers)
Date: 2013-08
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Citations: View citations in EconPapers (10)

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https://cbe.anu.edu.au/researchpapers/CEH/WP201309.pdf

Related works:
Working Paper: Distributional Impact of Commodity Price Shocks: Australia over a Century (2013)
Working Paper: Distributional Impact of Commodity Price Shocks: Australia over a Century (2013)
Working Paper: Distributional Impact of Commodity Price Shocks: Australia over a century (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:auu:hpaper:019

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