Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92982
Authors: 
Stuermer, Martin
Year of Publication: 
2013
Series/Report no.: 
Bonn Econ Discussion Papers 13/2013
Abstract: 
What drives the long-term demand for mineral commodities? This paper provides empirical evidence on the long-run demand for mineral commodities since 1840. I extend the partial adjustment model to account for country-specific structures and technological change. I find that a one percent increase in manufacturing output leads to a 1.5 percent increase in the demand for aluminum and a one percent increase in the demand for copper. The estimated manufacturing output elasticities of demand for lead, tin, and zinc are far below one. The estimated price elasticities of demand are highly inelastic for all mineral commodities in the long run. My results suggest that industrialization in China, for example, will cause the consumption of aluminum and copper to increase at a considerably higher rate than the one of lead, tin, and zinc. All variables adjust slowly to equilibrium, which helps to explain the extended fluctuation in these markets.
Subjects: 
Industrialization
elasticity of demand
nonstationary heterogenous panel
mineral commodities
JEL: 
O13
Q31
N50
Document Type: 
Working Paper

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