Federal Reserve Bank of Minneapolis
Economic Policy Paper
The Optimal Extraction of Exhaustible Resources
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.
Cite this item
V. V. Chari & Lawrence J. Christiano, The Optimal Extraction of Exhaustible Resources, Federal Reserve Bank of Minneapolis, Economic Policy Paper 14-5, 11 Dec 2014.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
Keywords: Commodities; Prices
This item with handle RePEc:fip:fedmep:14-5
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