The Power of Prices: How Fast Do Commodity Markets Adjust to Shocks?

Christian Bogmans, Andrea Pescatori, Ivan Petrella, Ervin Prifti and Martin Stuermer

No 2024/077, IMF Working Papers from International Monetary Fund

Abstract: This paper establishes supply and demand elasticities for a broad set of commodities based on a consistent dataset and identification methodology. We apply granular IV methods to a new cross-country panel dataset of commodity production and consumption from 1960-2021. The results indicate that commodity demand and supply are typically price inelastic. Demand and supply tend to be the most inelastic for minerals, whereas they are most elastic for agricultural commodities. The elasticities of energy commodities fall somewhere in between. Supply and demand become more elastic at longer time horizons for mineral and energy commodities, but not for most agricultural commodities.

Keywords: Commodities; international trade; price elasticities; demand; supply; energy; agriculture; minerals; metals.; commodity demand and supply; energy commodity; supply and demand elasticity; commodity demand and supply elastities; mineral commodity; Agricultural commodities; Demand elasticity; Supply elasticity; Consumption; Global (search for similar items in EconPapers)
Pages: 27
Date: 2024-04-16
New Economics Papers: this item is included in nep-agr and nep-ene
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