A Barrel of Oil or a Bottle of Wine; How Do Global Growth Dynamics Affect Commodity Prices?
Tahsin Saadi Sedik () and
Serhan Cevik ()
No 11/1, IMF Working Papers from International Monetary Fund
This paper investigates the causes of extreme fluctuations in commodity prices from 1990 to 2010. Analyzing two very distinct commodities-crude oil and fine wine, we find that macroeconomic factors are the main determinants of commodity prices. Although supply constraints have the expected effect, aggregate demand growth is the key factor. The empirical results show that while advanced economies account for more than half of global consumption, emerging economies make up the bulk of the incremental change in demand, thereby having a greater weight in commodity price formation. The results also show that the shift in the composition of aggregate commodity demand is a recent phenomenon.
Keywords: Agricultural commodities; Agricultural prices; Demand; Economic growth; Consumption; Commodity prices; Emerging markets; Oil sector; Oil prices; Oil; International liquidity; Supply; Wine, Comovement, Global growth, Emerging economies, crude oil, oil demand, Nonrenewable Resources and Conservation: Other, Energy: Demand and Supply, Energy and the Macroeconomy, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cwa, nep-ene and nep-opm
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Journal Article: A Barrel of Oil or a Bottle of Wine: How Do Global Growth Dynamics Affect Commodity Prices?* (2014)
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