Variable Long-Term Trends in Mineral Prices: The Ongoing Tug-of-War between Exploration, Depletion, and Technological Change

John Cuddington and Grant Nülle ()
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Grant Nülle: Division of Economics and Business, Colorado School of Mines

No 2013-02, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: This paper explores the use of low-frequency band-pass filters for describing long-run trends in real mineral commodity prices. This approach has the advantage of allowing long-run trends rate to evolve gradually over time, rather than assuming that they are constant (perhaps with occasional structural breaks) over time. This is a flexible way of capturing the ongoing `tug of war' between exploration, depletion, and technological change. Over 100 mineral and commodities, stretching back to the late 19th or early 20th century, are considered. The variety of LR trends is astonishing, but very few increase monotonically, contrary to the prediction of the basic Hotelling model. Some decline monotonically (as predicted by Prebisch and Singer); some have the U-shaped pattern predicted by Pindyck (1978), Heal (1981) and Slade (1982). Others have changed direction up to three times in the period since 1900. The tug of war continues with exhaustion nowhere in sight.

Pages: 51 pages
Date: 2013-05
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Citations: View citations in EconPapers (1)

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http://econbus-papers.mines.edu/working-papers/wp201302.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: Variable long-term trends in mineral prices: The ongoing tug-of-war between exploration, depletion, and technological change (2014)
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