Reconciling opposing views of the commodity boom
Author(s)
Makin, AJ
Griffith University Author(s)
Year published
2014
Metadata
Show full item recordAbstract
This paper presents a new framework for reconciling contrasting interpretations of the impact of world commodity prices on the Australian economy. Focusing on the relative price of commodities to other goods and services rather than the real exchange rate, it shows that a commodity price boost alters the composition, but not the level of GDP, while simultaneously raising national expenditure and potentially creating a trade deficit which widens further with autonomous expenditure increases. Immigration and foreign investment facilitates long run economic growth, although this further contracts the non-commodity sector of the ...
View more >This paper presents a new framework for reconciling contrasting interpretations of the impact of world commodity prices on the Australian economy. Focusing on the relative price of commodities to other goods and services rather than the real exchange rate, it shows that a commodity price boost alters the composition, but not the level of GDP, while simultaneously raising national expenditure and potentially creating a trade deficit which widens further with autonomous expenditure increases. Immigration and foreign investment facilitates long run economic growth, although this further contracts the non-commodity sector of the economy.
View less >
View more >This paper presents a new framework for reconciling contrasting interpretations of the impact of world commodity prices on the Australian economy. Focusing on the relative price of commodities to other goods and services rather than the real exchange rate, it shows that a commodity price boost alters the composition, but not the level of GDP, while simultaneously raising national expenditure and potentially creating a trade deficit which widens further with autonomous expenditure increases. Immigration and foreign investment facilitates long run economic growth, although this further contracts the non-commodity sector of the economy.
View less >
Journal Title
Economic Analysis and Policy
Volume
44
Subject
Economics
Other economics not elsewhere classified