The Sectorial Impact of Commodity Price Shocks in Australia

37 Pages Posted: 19 Feb 2014 Last revised: 20 Feb 2014

See all articles by Stephen Knop

Stephen Knop

University of Tasmania

Joaquin Vespignani

University of Tasmania - School of Economics and Finance

Date Written: February 2014

Abstract

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

Knop, Stephen and Vespignani, Joaquin, The Sectorial Impact of Commodity Price Shocks in Australia (February 2014). CAMA Working Paper No. 19/2014, Available at SSRN: https://ssrn.com/abstract=2398115 or http://dx.doi.org/10.2139/ssrn.2398115

Stephen Knop

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Joaquin Vespignani (Contact Author)

University of Tasmania - School of Economics and Finance ( email )

Commerce Building,
Sandy Bay Campus
Sandy Bay, TAS, Tasmania 7005
Australia

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