Discussion Paper
The Optimal Extraction of Exhaustible Resources
Abstract: Policymakers concerned about rapid swings in commodity prices seek economic guidance about causal factors and future trends, but standard models?based on Harold Hotelling?s classic 1931 theory?are unable to explain actual data on price variability for a wide range of commodities. In this paper, we review this ?Hotelling puzzle? and suggest modifications to current theory that may improve explanations of commodity price changes and provide better policy advice.
Keywords: Prices; Commodities;
JEL Classification: E31;
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Provider: Federal Reserve Bank of Minneapolis
Part of Series: Economic Policy Paper
Publication Date: 2014-12-11
Number: 14-5