Download or read book Commodity Prices Stock Prices and Economic Activity in a Small Open Economy written by Shernette McLeod and published by . This book was released on 2018 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis is comprised of three papers which jointly examine the role of commodity prices as well as other asset prices in influencing the evolution of economic activity in a small-open economy (SOE). Using Canada as the quintessential small-open economy, each chapter adopts a particular approach to investigating this dynamic relationship. It is hoped that the contribution made in this thesis to understanding the relationship will aid policy-makers as they attempt to address the associated policy questions which are often fraught with difficulties and uncertainty. In chapter 1 the use of a recursively identified Vector Auto-Regression (VAR) is employed to study the impact of commodity price shocks on Canada's macro-economy. While similar analysis has been carried out before, this has tended to focus solely on the impact of oil prices. Additionally, the analysis has tended to focus on aggregate output, while neglecting the specific sectoral impact. Given that each sectors' exposure to commodity price movements will be different, one would also expect varying sectoral responses to these shocks. Chapter 1 attempts to focus on this and thus offers a level of insight into the operation of the Canadian macro-economy which has not been extensively addressed in the literature. The results suggest that indeed there is divergent sectoral responses to commodity price shocks, using a broad measure of commodity prices. The commodity producing sectors of the economy respond favourably to an unexpected rise in commodity prices, whilst the manufacturing sector is negatively impacted by such movements. We also found evidence that policy-makers may attempt to contain any inflationary pressures emanating from rising commodity prices by raising interest rates. Chapter 2 delves even further into the dynamics of this relationship by employing a Dynamic Stochastic General Equilibrium (DSGE) model. In this chapter we extend the analysis undertaken in chapter 1, where we are again attempting to ascertain the sectoral responses to a commodity price shock. The use of this modelling framework however allows us to analyse that relationship in a manner which is internally consistent and also in-line with our beliefs about the behaviour of economic agents. Additionally, the DSGE model allows us to conduct counter-factual policy experiments which were not possible using the VAR framework. The results of the model are generally in-line with those found in chapter 1, as the commodity price shock has differing impacts on the various sectors of the economy. The results suggest that just examining the aggregate effects of commodity price shocks could overshadow important sectoral differences which are subsumed in these aggregate figures. Additionally, the counter factual policy exercises indicate that actions taken by the Central Bank during the Global Financial Crisis positively impacted Canada's economic performance during the crisis and the period immediately after. In the final chapter, co-authored with Jean-Paul Lam, we seek to quantify the interdependence between stock prices and monetary policy using an underidentified Structural VAR (SVAR) for Canada and the United States. We find that employing a recursive identification leads to counterfactual responses for the stock market following a monetary policy shock. In the underidentified VAR, the stock market and monetary policy are allowed to simultaneously react to each other's shock through a combination of short-run, long-run and sign restrictions. Unlike many studies in this literature, we impose a minimal number of restrictions on the short-run and long-run matrix, allowing the data to uncover the relationship between the variables in the SVAR. We find that an increase of 25 basis points (b.p.) in the policy rate of the central bank leads to a fall of about 1.75% in stock prices in Canada and to a fall of about 1.25% in stock prices in the U.S. This effect of monetary policy on stock prices is larger in Canada compared to the U.S. mainly because sectors that are interest rate sensitive, such as financials and energy account for a much larger share of the stock index in Canada compared to the U.S. Following a stock market shock, the short-term interest, industrial production, inflation and commodity prices rise both in Canada and in the U.S. A 1% increase in the stock market leads to an increase of about 27 b.p. in the overnight rate in Canada while it leads to an increase of about 10 b.p. in the Federal funds rate.

Download or read book The Economics and Finance of Commodity Price Shocks written by Mikidadu Mohammed and published by Routledge. This book was released on 2021-11-25 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: The behaviour of commodity prices never ceases to marvel economists, financial analysts, industry experts, and policymakers. Unexpected swings in commodity prices used to occur infrequently but have now become a permanent feature of global commodity markets. This book is about modelling commodity price shocks. It is intended to provide insights into the theoretical, conceptual, and empirical modelling of the underlying causes of global commodity price shocks. Three main objectives motivated the writing of this book. First, to provide a variety of modelling frameworks for documenting the frequency and intensity of commodity price shocks. Second, to evaluate existing approaches used for forecasting large movements in future commodity prices. Third, to cover a wide range and aspects of global commodities including currencies, rare–hard–lustrous transition metals, agricultural commodities, energy, and health pandemics. Some attempts have already been made towards modelling commodity price shocks. However, most tend to narrowly focus on a subset of commodity markets, i.e., agricultural commodities market and/or the energy market. In this book, the author moves the needle forward by operationalizing different models, which allow researchers to identify the underlying causes and effects of commodity price shocks. Readers also learn about different commodity price forecasting models. The author presents the topics to readers assuming less prior or specialist knowledge. Thus, the book is accessible to industry analysts, researchers, undergraduate and graduate students in economics and financial economics, academic and professional economists, investors, and financial professionals working in different sectors of the commodity markets. Another advantage of the book’s approach is that readers are not only exposed to several innovative modelling techniques to add to their modelling toolbox but are also exposed to diverse empirical applications of the techniques presented.

Download or read book Essays on Commodity Prices and Economic Activity in a Resource Rich Country written by Eugenio Maria Paulo and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The increase in commodity prices that has taken place in the past decade or so has resulted in renewed interest in the debate about the macroeconomic consequences of such price increase. Previous studies tend to assume that all commodity price shocks are alike and advocate a "one size fit all" policy response by monetary authorities, either by means of contractionary monetary policy to alleviate inflationary pressures or doing nothing, since these shocks are believed to have insignificant economic impact. This dissertation analyses the impact of fluctuations in commodity prices on the South African economy. The first chapter studies the impact of shocks to prices of four commodities on monetary policy variables. Results show that shocks to different commodity prices have different effects on the monetary policy variables, hence rejecting the "one size fits all" policy response by monetary authorities, as some researchers have suggested. Chapter two investigates the sectorial effects of commodity price shocks. The Dutch Disease hypothesis suggests that a boom in the natural resource sector shrinks the manufacturing sector through crowding out and appreciation of the real exchange rate. South Africa is a major exporter of a large number of commodities. Using a structural VAR framework this chapter analyzes the impact of shocks to different commodity prices on the production and employment levels in the manufacturing and mining sectors in South Africa. The results show that the commodity price boom has had a positive impact on both sectors, hence the manufacturing sector did not experience signs of the Dutch disease. Chapter three examines the volatility transmission between commodity prices and nominal exchange rate in South Africa. This chapter uses conditional and realized volatility models to estimate volatility in exchange rate, gold, platinum, oil, palladium and silver prices and then employs Granger-causality, Impulse Response analysis, Variance Decomposition and Ordinary Least Squares to analyze the volatility transmission from the commodity prices to the nominal exchange rate. The results show that there is volatility transmission from commodity prices to the nominal exchange rate, hence knowing the volatility in commodity prices would improve investor's ability to manage risk in South Africa.

Download or read book Commodity Prices and Labour Market Dynamics in Small Open Economies written by Martin Bodenstein and published by . This book was released on 2016 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the connection between commodity price shocks and unemployment in advanced resource-rich small open economies from an empirical and theoretical perspective. Shocks to commodity prices are shown to influence labour market conditions primarily through the real exchange rate contrasting sharply with the transmission of technology shocks which are typically argued to affect the economy by changing labour productivity. The empirical impact of commodity price shocks is obtained from estimating a panel vector autoregression; a positive price shock is found to be expansionary for the components of GDP, causes the real exchange rate to appreciate, and improves labour market conditions. For every one percent increase in commodity prices, our estimates suggest a one basis point decline in the unemployment rate and at its peak a 0.3% increase in unfilled vacancies. We then match the impulse responses to a commodity price shock from a small open economy model with net commodity exports and search and matching frictions in the labour market to these empirical responses. As in the data, an increase in commodity prices raises consumption demand in the small open economy and induces a real appreciation. Facing higher relative prices for their goods, non-commodity producing firms post additional job vacancies, causing the number of matches between firms and workers to rise. As a result, unemployment falls, even if employment in the commodity-producing sector is negligible. For commodity price shocks, there is little difference between the standard Diamond (1982), Mortensen (1982), and Pissarides (1985) approach of modelling search and matching frictions and the alternating offer bargaining model suggested by Hall and Milgrom (2008).

Download or read book Asset Prices and Monetary Policy written by John Y. Campbell and published by University of Chicago Press. This book was released on 2008-11-15 with total page 444 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economic growth, low inflation, and financial stability are among the most important goals of policy makers, and central banks such as the Federal Reserve are key institutions for achieving these goals. In Asset Prices and Monetary Policy, leading scholars and practitioners probe the interaction of central banks, asset markets, and the general economy to forge a new understanding of the challenges facing policy makers as they manage an increasingly complex economic system. The contributors examine how central bankers determine their policy prescriptions with reference to the fluctuating housing market, the balance of debt and credit, changing beliefs of investors, the level of commodity prices, and other factors. At a time when the public has never been more involved in stocks, retirement funds, and real estate investment, this insightful book will be useful to all those concerned with the current state of the economy.

Download or read book International Dimensions of Monetary Policy written by Jordi Galí and published by University of Chicago Press. This book was released on 2010-03-15 with total page 663 pages. Available in PDF, EPUB and Kindle. Book excerpt: United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.

Download or read book Commodity Prices and Markets written by Takatoshi Ito and published by University of Chicago Press. This book was released on 2011-03 with total page 346 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fluctuations of commodity prices, most notably of oil, capture considerable attention and have been tied to important economic effects. This book advances our understanding of the consequences of these fluctuations, providing both general analysis and a particular focus on the countries of the Pacific Rim.

Download or read book World Economic Outlook April 2012 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2012-04-17 with total page 299 pages. Available in PDF, EPUB and Kindle. Book excerpt: The April 2012 issue of the World Economic Outlook assesses the prospects for the global economy, which has gradually strengthened after a major setback during 2011. The threat of a sharp global slowdown eased with improved activity in the United States and better policies in the euro area. Weak recovery will likely resume in the major advanced economies, and activity will remain relatively solid in most emerging and developing economies. However, recent improvements are very fragile. Policymakers must calibrate policies to support growth in the near term and must implement fundamental changes to achieve healthy growth in the medium term. Chapter 3 examines how policies directed at real estate markets can accelerate the improvement of household balance sheets and thus support otherwise anemic consumption. Chapter 4 examines how swings in commodity prices affect commodity-exporting economies, many of which have experienced a decade of good growth. With commodity prices unlikely to continue growing at the recent elevated pace, however, these economies may have to adapt their fiscal and other policies to lower potential output growth in the future.

Download or read book Commodity Price Dynamics written by Craig Pirrong and published by Cambridge University Press. This book was released on 2011-10-31 with total page 239 pages. Available in PDF, EPUB and Kindle. Book excerpt: Commodities have become an important component of many investors' portfolios and the focus of much political controversy over the past decade. This book utilizes structural models to provide a better understanding of how commodities' prices behave and what drives them. It exploits differences across commodities and examines a variety of predictions of the models to identify where they work and where they fail. The findings of the analysis are useful to scholars, traders and policy makers who want to better understand often puzzling - and extreme - movements in the prices of commodities from aluminium to oil to soybeans to zinc.

Download or read book Oil Price Uncertainty written by Apostolos Serletis and published by World Scientific Publishing Company Incorporated. This book was released on 2012 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: The relationship between the price of oil and the level of economic activity is a fundamental issue in macroeconomics. There is an ongoing debate in the literature about whether positive oil price shocks cause recessions in the United States (and other oil-importing countries), and although there exists a vast empirical literature that investigates the effects of oil price shocks, there are relatively few studies that investigate the direct effects of uncertainty about oil prices on the real economy. The book uses recent advances in macroeconomics and financial economics to investigate the effects of oil price shocks and uncertainty about the price of oil on the level of economic activity.

Download or read book Global Implications of Lower Oil Prices written by Mr.Aasim M. Husain and published by International Monetary Fund. This book was released on 2015-07-14 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The sharp drop in oil prices is one of the most important global economic developments over the past year. The SDN finds that (i) supply factors have played a somewhat larger role than demand factors in driving the oil price drop, (ii) a substantial part of the price decline is expected to persist into the medium term, although there is large uncertainty, (iii) lower oil prices will support global growth, (iv) the sharp oil price drop could still trigger financial strains, and (v) policy responses should depend on the terms-of-trade impact, fiscal and external vulnerabilities, and domestic cyclical position.

Download or read book Currencies Commodities and Consumption written by Kenneth W. Clements and published by Cambridge University Press. This book was released on 2013-01-31 with total page 401 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discusses economic issues associated with exchange rates, commodity prices, the economic size of countries and alternatives to PPP exchange rates.

Download or read book An Inquiry Into the Nature and Causes of the Wealth of Nations written by Adam Smith and published by . This book was released on 1822 with total page 522 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Global Economic Prospects June 2021 written by World Bank and published by World Bank Publications. This book was released on 2021-08-03 with total page 339 pages. Available in PDF, EPUB and Kindle. Book excerpt: The world economy is experiencing a very strong but uneven recovery, with many emerging market and developing economies facing obstacles to vaccination. The global outlook remains uncertain, with major risks around the path of the pandemic and the possibility of financial stress amid large debt loads. Policy makers face a difficult balancing act as they seek to nurture the recovery while safeguarding price stability and fiscal sustainability. A comprehensive set of policies will be required to promote a strong recovery that mitigates inequality and enhances environmental sustainability, ultimately putting economies on a path of green, resilient, and inclusive development. Prominent among the necessary policies are efforts to lower trade costs so that trade can once again become a robust engine of growth. This year marks the 30th anniversary of the Global Economic Prospects. The Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.

Download or read book Essential Economics written by Matthew Bishop and published by Bloomberg Press. This book was released on 2004-05-01 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Energy Transition Metals written by Lukas Boer and published by International Monetary Fund. This book was released on 2021-10-12 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The energy transition requires substantial amounts of metals such as copper, nickel, cobalt and lithium. Are these metals a key bottleneck? We identify metal-specific demand shocks, estimate supply elasticities and pin down the price impact of the energy transition in a structural scenario analysis. Metal prices would reach historical peaks for an unprecedented, sustained period in a net-zero emissions scenario. The total value of metals production would rise more than four-fold for the period 2021 to 2040, rivaling the total value of crude oil production. Metals are a potentially important input into integrated assessments models of climate change.

Download or read book Microeconomics in Context written by Neva Goodwin and published by Routledge. This book was released on 2015-12-07 with total page 444 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microeconomics in Context lays out the principles of microeconomics in a manner that is thorough, up to date, and relevant to students. Like its counterpart, Macroeconomics in Context, the book is uniquely attuned to economic realities. The "in Context" books offer affordability, accessible presentation, and engaging coverage of current policy issues from economic inequality and global climate change to taxes. Key features include: --Clear explanation of basic concepts and analytical tools, with advanced models presented in optional chapter appendices; --Presentation of policy issues in historical, institutional, social, political, and ethical context--an approach that fosters critical evaluation of the standard microeconomic models, such as welfare analysis, labor markets, and market competition; --A powerful graphical presentation of various measures of well-being in the United States, from income inequality and educational attainment to home prices; --Broad definition of well-being using both traditional economic metrics and factors such as environmental quality, health, equity, and political inclusion; --New chapters on the economics of the environment, taxes and tax policy, common property and public goods, and welfare analysis; --Expanded coverage of high-interest topics such as behavioral economics, labor markets, and healthcare; --Full complement of instructor and student support materials online, including test banks and grading through Canvas.