Commodity prices: How important are real and nominal shocks?
We consider the response of both nominal and real commodity prices on world markets to real and nominal shocks by hypothesizing that nominal shocks can permanently affect nominal commodity prices, but can have only temporary effect on real commodity prices. Real shocks, in contrast, can have permane...
| Main Authors: | , , |
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| Format: | Working Paper |
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Centre for Research in Applied Economics, Curtin Business School
2009
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| Online Access: | http://hdl.handle.net/20.500.11937/41205 |
| _version_ | 1848756080246521856 |
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| author | Bloch, Harry Fraser, P. MacDonald, Garry |
| author_facet | Bloch, Harry Fraser, P. MacDonald, Garry |
| author_sort | Bloch, Harry |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | We consider the response of both nominal and real commodity prices on world markets to real and nominal shocks by hypothesizing that nominal shocks can permanently affect nominal commodity prices, but can have only temporary effect on real commodity prices. Real shocks, in contrast, can have permanent as well as temporary effects on both nominal and real commodity prices. When nominal and real shocks are decomposed in this manner, real shocks are found to be of much greater importance to the observed movements in commodity prices. Further, when the shocks are related to the rate of growth of world industrial production as an indicator of business cycle movements, the results suggest that the impact of the business cycle is self-stabilizing in that there is an initial positive effect on growth in commodity prices followed by a fully offsetting negative effect. |
| first_indexed | 2025-11-14T09:06:30Z |
| format | Working Paper |
| id | curtin-20.500.11937-41205 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:06:30Z |
| publishDate | 2009 |
| publisher | Centre for Research in Applied Economics, Curtin Business School |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-412052017-01-30T14:49:04Z Commodity prices: How important are real and nominal shocks? Bloch, Harry Fraser, P. MacDonald, Garry commodity prices shocks business cycle industrial production We consider the response of both nominal and real commodity prices on world markets to real and nominal shocks by hypothesizing that nominal shocks can permanently affect nominal commodity prices, but can have only temporary effect on real commodity prices. Real shocks, in contrast, can have permanent as well as temporary effects on both nominal and real commodity prices. When nominal and real shocks are decomposed in this manner, real shocks are found to be of much greater importance to the observed movements in commodity prices. Further, when the shocks are related to the rate of growth of world industrial production as an indicator of business cycle movements, the results suggest that the impact of the business cycle is self-stabilizing in that there is an initial positive effect on growth in commodity prices followed by a fully offsetting negative effect. 2009 Working Paper http://hdl.handle.net/20.500.11937/41205 Centre for Research in Applied Economics, Curtin Business School fulltext |
| spellingShingle | commodity prices shocks business cycle industrial production Bloch, Harry Fraser, P. MacDonald, Garry Commodity prices: How important are real and nominal shocks? |
| title | Commodity prices: How important are real and nominal shocks? |
| title_full | Commodity prices: How important are real and nominal shocks? |
| title_fullStr | Commodity prices: How important are real and nominal shocks? |
| title_full_unstemmed | Commodity prices: How important are real and nominal shocks? |
| title_short | Commodity prices: How important are real and nominal shocks? |
| title_sort | commodity prices: how important are real and nominal shocks? |
| topic | commodity prices shocks business cycle industrial production |
| url | http://hdl.handle.net/20.500.11937/41205 |