EconStor >
Bank of Canada, Ottawa >
Bank of Canada Discussion Papers >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/66922
  
Title:Emerging Asia's impact on food and oil prices: A model-based analysis PDF Logo
Authors:Lalonde, René
Maier, Philipp
Muir, Dirk
Issue Date:2009
Series/Report no.:Bank of Canada Discussion Paper 2009-3
Abstract:The authors explore the usefulness of macroeconomic models in analyzing global economic developments by examining movements in commodity prices between July 2007 and July 2008. They use the Bank of Canada's version of the Global Economy Model and investigate the longerterm outlook for commodity prices by constructing two different, globally consistent, scenarios for emerging Asia. In the first scenario, the authors assume that a persistent increase in emerging Asia's productivity underlies its sustained growth; in the second scenario, they assume that a combination of productivity increases and a temporary demand shock underlie its growth. The demand for commodities increases in both scenarios, but, by comparing the two, the authors reveal that each scenario has considerably different economic implications. Allowing for the possibility that a small share of emerging Asia's growth might be fuelled by a temporary demand shock generates a strong boom-bust outcome for emerging Asia, and amplifies the volatility in commodity markets. The authors also investigate the possibility that emerging markets react to inflation by revaluing their exchange rates by 10 per cent. This affects the outlook for commodities only marginally.
Subjects:International topics
Recent economic and financial developments
JEL:E30
E50
E58
E60
Document Type:Working Paper
Appears in Collections:Bank of Canada Discussion Papers

Files in This Item:
File Description SizeFormat
592150909.pdf285.76 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/66922

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.