Commodity Prices and GDP Growth

33 Pages Posted: 16 Jun 2020

See all articles by Yiqing Ge

Yiqing Ge

Tsinghua University - Institute of Economics

Ke Tang

Institute of Economics, School of Social Sciences, Tsinghua University

Date Written: May 22, 2020

Abstract

This paper explores the extent to which commodity prices can predict GDP growth rates of various countries using indices of 27 commonly traded commodity futures. Commodity returns can strongly predict the next quarter’s GDP growth, while the basis shows a reasonable level of predictive power. Overall, commodity prices can be considered a leading indicator of economic growth; increasing commodity prices and basis values indicate a stronger future economy.

Keywords: GDP Growth; Commodity Prices; Basis; Predictability

JEL Classification: E23; E27; F43; G13

Suggested Citation

Ge, Yiqing and Tang, Ke, Commodity Prices and GDP Growth (May 22, 2020). International Review of Financial Analysis, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3607744

Yiqing Ge

Tsinghua University - Institute of Economics ( email )

MingZhai Building
Beijing, 100084
China

Ke Tang (Contact Author)

Institute of Economics, School of Social Sciences, Tsinghua University ( email )

No.1 Tsinghua Garden
Beijing, 100084
China

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