Working Paper

Industrialization and the demand for mineral commodities

Abstract: This paper uses a new data set extending back to 1840 to investigate how industrialization affects the derived demand for mineral commodities. I establish that there is substantial heterogeneity in the long-run effect of manufacturing output on demand across five commodities after controlling for sectoral change, substitution and technological development. My results imply substantial differences across commodities with regard to future demand from industrializing countries and with regard to the effect of demand shocks on prices. Models should include non-Gormand preferences to account for this heterogeneity.

Keywords: Commodities; non-renewable resources; elasticity of demand; non-homothetic preferences; nonstationary heterogenous panel;

JEL Classification: E23; N50; O13; Q31;

https://doi.org/10.24149/wp1413

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2014-12-29

Number: 1413

Pages: 20 pages