econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 20 June 2016

The Connection Between Commodity Prices And Output

from the St Louis Fed

The business cycles of many emerging economies depend pretty heavily on fluctuations in global commodity prices, according to an article in The Regional Economist.

Research Officer and Economist Alexander Monge-Naranjo and Technical Research Associate Faisal Sohail examined a quarterly commodity price index as well as output for Argentina, Brazil, Canada, Colombia and Russia over the period 2000-15. Specifically, they looked at deviations from trend for commodity prices and output. They estimated and removed the trend from each variable, leaving the cyclical component shown in the figure below.

cyclical component of prices and output

The authors noted that commodity prices have experienced significant volatility over the past 16 years. In particular:

  • During 2000-06, commodity prices trended upward with frequent fluctuations around that trend.

  • Prices increased dramatically the year before the Great Recession.

  • They decreased significantly during the recession, then recovered sharply by early 2009 and recovered or exceeded prerecession levels by 2011.

  • They were relatively stable during 2011-14.

Energy Prices

Monge-Naranjo and Sohail also discussed the drop in commodity prices since 2014, most notably in energy prices, and explained that some of the drop was due to supply factors. They wrote: "In particular, the newfound abundance of energy in the U.S. and resulting fight for market share by the Organization of the Petroleum Exporting Countries have led to plentiful supply and falling prices."

Output and Commodity Prices

Monge-Naranjo and Sohail examined the connection between deviations in commodity prices and in output from trend. In the figure above, deviations of output from trend are measured on the right axis, and it shows that the two are highly correlated. They wrote: "Indeed, the dramatic, fast and sustained recovery in commodity prices must be credited as a major source of the relatively stronger, faster and sustained recovery of emerging markets following the recession, relative to the recoveries in the U.S., Europe, Japan and other major economies."

They concluded: "One or two years after the collapse in 2009, a tidal wave in rising commodities prices pushed emerging economies to quickly recover and grow. Nowadays, the tidal wave has receded, and many emerging markets are in danger of capsizing."

Additional Resources

Source

https://www.stlouisfed.org/on-the-economy/2016/june/connection-commodity-prices-output

Disclaimer

Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
The Theory of the Monetary Circuit: A Critique
The Expected Effects of Petitions to Improve the Monetary System
News Blog
This Mushroom Starts Killing You Before You Even Realize It
August 2016 Median Household Income Has Declined From The Beginning Of The Year
August 2016 Pending Home Sales Index Declines?
24 September 2016 Initial Unemployment Claims: Rolling Averages Continue to Improve.
Third Estimate 2Q2016 GDP Revised Upward. Corporate Profits Down.
The Terrorist Networks At Our Fingertips
Infographic Of The Day: Dubai Interesting Statistics And Facts
Early Headlines: Asia Stocks Up, Oil Surges, OPEC Cuts Production, Student Loan Woes Mount, Trump Still Close, Aleppo Hospitals Bombed, Huge Wind Storm In Oz And More
The World's Most Sustainable Cities
Big Sam In Bad Company
Other Ways To Spend Your AirPod Budget
Crashing Space Station Shows Why China Must Start To Collaborate In Orbit
NFL Edges Towards A Full House In London
Investing Blog
Will Deutsche Bank Survive?
Banks Of Absurdity
Opinion Blog
The Federal Reserve Note
Trump, Trade And Taxes
Precious Metals Blog
War On Cash Turns To $20, $50, And $100 Bills
Live Markets
29Sep2016 Market Update: WTI Crude Rises Into 48 Handle, Goldman Sticks To Lower Crude Prices In The Future, US Dollar Volatile Reflecting On Future Market Movements, Gold Moving Higher Signaling Weakening US Market
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved