The Sectorial Impact of Commodity Price Shocks in Australia
37 Pages Posted: 19 Feb 2014 Last revised: 20 Feb 2014
Date Written: February 2014
It is found that commodity price shocks largely affect the mining, construction and manufacturing industries in Australia. However, the financial and insurance sector is found to be relatively unaffected. Mining industry profits and nominal output substantially increase in response to commodity price shocks. Construction output is also found to increase significantly, especially in response to a bulk commodities shock, as a result of increased demand for resource related construction. Increased demand for construction has a positive spillover effect to parts of the manufacturing industry that supply the construction sector with intermediate inputs, such as the non-metallic mineral sub industry. In contrast, other manufacturing sub industries with only tenuous links to the resources sector such as textiles, clothing and other manufacturing, are relatively unresponsive to commodity price shocks.
Keywords: Commodity prices, Commodity shocks, Australian economy
JEL Classification: E00, E30, F20
Suggested Citation: Suggested Citation