Frankel, J. (2014) “Why so many commodity prices are down in the US, yet up in Europe“, VoxEU Organisation, 24 Δεκεμβρίου.
Commodity prices have been falling in the US. This column argues that monetary policy has played a determining role in the falling prices trend. Monetary tightening is highly anticipated in the US, which is likely to raise short-term interest rates. At the same time, the ECB and Bank of Japan have enhanced monetary stimulus through quantitative easing. As a result, the dollar has appreciated against the euro and the yen. In this way, commodities can be down in terms of dollars and up in terms of other currencies.
Falling commodity prices
Oil prices plummeted 43% during the course of 2014 – good news for oil-importing countries, but bad news for Russia, Nigeria, Venezuela, and other oil exporters. Some attribute the price drop to the US shale-energy boom. Others cite OPEC’s failure to agree on supply restrictions.
But that is not the whole story. The price of iron ore is down, too. So are gold, silver, and platinum prices. And the same is true for sugar, cotton, and soybean prices. In fact, most dollar commodity prices have fallen since the beginning of the year. Though a host of sector-specific factors affect the price of each commodity, the fact that the downswing is so broadly shared – as is often the case with big price swings – suggests that macroeconomic factors are at work.
Σχετικές αναρτήσεις:
- Alvarez, F., Le Bihan, H. & Lippi, F. (2014) “Modelling sticky prices and the effect of monetary shocks“, VoxEU Organisation, 30 Σεπτεμβρίου.
- Athanassios Petralias & Pródromos Prodromídis (2014) “Price discovery under crisis: Uncovering the determinant factors of prices using efficient Bayesian model selection methods“, Παρατηρητήριο για την Κρίση, 28 Ιουλίου.
- Benkovskis, K. & Woerz, J. (2014) “Lower import prices = 100% welfare gains? Not necessarily: don′t forget the impact of consumer taste and product quality“, VoxEU Organisation, 15 Ιουλίου.