Advertisement

Cliometrica

pp 1–20 | Cite as

From boom to bust: a typology of real commodity prices in the long run

  • David S. Jacks
Original Paper
  • 74 Downloads

Abstract

This paper considers the evidence on real commodity prices from 1900 to 2015 for 40 commodities, representing 8.72 trillion US dollars of production in 2011. In doing so, it suggests and documents a comprehensive typology of real commodity prices, comprising long-run trends, medium-run cycles, and short-run boom/bust episodes. The main findings can be summarized as follows: (1) real commodity prices have been on the rise—albeit modestly—from 1950; (2) there is a pattern—in both past and present—of commodity price cycles, entailing large and long-lived deviations from underlying trends; (3) these commodity price cycles are themselves punctuated by boom/bust episodes which are historically pervasive.

Keywords

Booms and busts Real commodity prices Trend-cycle decomposition 

JEL Classification

N5 Q21 Q31 Q41 

Notes

Acknowledgements

This paper was prepared for the ANU Centre for Economic History/Centre for Applied Macroeconomic Analysis conference on “Commodity Price Volatility, Past and Present” held in Canberra. I thank the conference organizers for their hospitality and providing the impetus for this paper. I also thank the University of New South Wales for their hospitality while this paper was completed, Stephan Pfaffenzeller and Nigel Stapledon for help with the data, and the editor and two referees for their comments. I also appreciate comments received from seminars at Adelaide, the Federal Reserve Bank of Dallas, Hong Kong University of Science and Technology, New South Wales, Oxford, Peking University Guanghua School of Management and School of Economics, Shanghai University of Finance and Economics, Shanghai University of International Business and Economics, UIBE, and Wake Forest as well as from the EH-Clio Lab Annual Meeting and the Muenster Workshop on the Determinants and Impact of Commodity Price Dynamics. Finally, I gratefully acknowledge the Social Science and Humanities Research Council of Canada for research support.

References

  1. Cashin P, McDermott CJ (2002) The long-run behavior of commodity prices: small trends and big variability. IMF Staff Pap 49(2):175–199Google Scholar
  2. Christiano L, Fitzgerald T (2003) the band pass filter. Int Econ Rev 44(2):435–465CrossRefGoogle Scholar
  3. Cuddington JT, Jerrett D (2008) Super cycles in real metal prices? IMF Staff Pap 55(4):541–565CrossRefGoogle Scholar
  4. Ehrlich PR (1968) The population bomb. Ballantine Books, New YorkGoogle Scholar
  5. Ehrlich PR, Ehrlich AH (1990) The population explosion. Simon Schuster, New YorkGoogle Scholar
  6. Erten B, Ocampo JA (2013) Super cycles of commodity prices since the mid-nineteenth century. World Dev 44(1):14–30CrossRefGoogle Scholar
  7. Hamilton JD (2017) Why you should never use the Hodrick–Prescott filter. NBER Working Paper 23429Google Scholar
  8. Heap A (2005) China—the engine of commodities super cycle. Citigroup Smith BarneyGoogle Scholar
  9. Jacks DS (2013) From boom to bust: a typology of real commodity prices in the long run. NBER Working Paper 18874Google Scholar
  10. Jacks DS, Stuermer M (2018) What drives commodity price booms and busts? Energy Econ (forthcoming)Google Scholar
  11. Jacks DS, O’Rourke KH, Williamson JG (2011) Commodity price volatility and world market integration since 1700. Rev Econ Stat 93(3):800–813CrossRefGoogle Scholar
  12. Jerrett D, Cuddington JT (2008) Broadening the statistical search for metal price super cycles to steel and related metals. Resour Policy 33(4):188–195CrossRefGoogle Scholar
  13. Mendoza EG, Terrones ME (2012) An anatomy of credit booms and their demise. NBER Working Paper 18379Google Scholar
  14. Moyo D (2012) Winner take all: China’s race for resources and what it means for the world. Basic Books, New YorkGoogle Scholar
  15. Officer LH (2012) The annual consumer price index for the United States, 1774–2011. http://www.measuringworth.com/uscpi. Accessed 6 Feb 2015
  16. Rogers J (2004) Hot commodities: how anyone can invest and profit in the world’s best market. Random House, New YorkGoogle Scholar
  17. Sabin P (2013) The bet. Yale University Press, New HavenGoogle Scholar
  18. Simon J (1981) The ultimate resource. Princeton University Press, PrincetonGoogle Scholar
  19. Simon J (1996) The ultimate resource 2. Princeton University Press, PrincetonGoogle Scholar
  20. van der Ploeg F, Poelhekke S (2009) Volatility and the natural resource curse. Oxf Econ Pap 61(4):727–760CrossRefGoogle Scholar
  21. Yergin D (1991) The prize. Simon & Schuster Inc., New YorkGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Simon Fraser UniversityBurnabyCanada
  2. 2.National Bureau of Economic ResearchCambridgeUSA

Personalised recommendations