Commodity Prices and the Dynamics of Inflation in Commodity-Exporting Nations: Evidence from Australia and Canada

13 Pages Posted: 19 Dec 2006

See all articles by Harry Bloch

Harry Bloch

Curtin University of Technology - Curtin Business School - School of Economics and Finance

Alfred Michael Dockery

Curtin University - School of Economics and Finance; Curtin University - Centre for Research in Applied Economics; Bankwest Curtin Economics Centre

David Sapsford

University of Liverpool Management School (ULMS) - Economics Division

Abstract

A commodity-price boom is under way. What does this boom mean for inflation in countries with substantial net commodity exports? The answer depends on movements in commodity prices, changes in foreign exchange rates and the determinants of domestic price inflation. We estimate equations to provide indications of the strength of each of these forces for both Australia and Canada. The results show that world commodity prices move pro-cyclically with world industrial production and that rates of change in commodity prices are directly related to domestic inflation in both countries. However, there is an offsetting impact of exchange-rate changes, which is strong enough in the case of Australia, but not Canada, to substantially eliminate the inflationary impact of a commodity-price boom.

Suggested Citation

Bloch, Harry and Dockery, Alfred Michael and Sapsford, David, Commodity Prices and the Dynamics of Inflation in Commodity-Exporting Nations: Evidence from Australia and Canada. Economic Record, Vol. 82, No. S1, pp. S97-S109, September 2006. Available at SSRN: https://ssrn.com/abstract=922169 or http://dx.doi.org/10.1111/j.1475-4932.2006.00336.x

Harry Bloch (Contact Author)

Curtin University of Technology - Curtin Business School - School of Economics and Finance ( email )

Curtin University
GPO Box U 1987
Perth, 6845
Australia
+61 8 9266 2035 (Phone)
+61 8 9266 3026 (Fax)

Alfred Michael Dockery

Curtin University - School of Economics and Finance ( email )

GPO Box U 1987
Perth, Western Australia 6845
Australia

Curtin University - Centre for Research in Applied Economics ( email )

GPO Box U1987
Perth, Western Australia 6845
Australia

Bankwest Curtin Economics Centre ( email )

GPO Box U1987
Perth, WA 6845
Australia
61 8 9266 1744 (Phone)
61 8 9266 2373 (Fax)

HOME PAGE: http://https://bcec.edu.au/

David Sapsford

University of Liverpool Management School (ULMS) - Economics Division ( email )

Eleanor Rathbone Building
Bedford Street North
Liverpool L69 7ZA
United Kingdom
+44 (0)151 795 3701 (Phone)
+44 (0)151 795 3001 (Fax)

HOME PAGE: http://www.liv.ac.uk/management/

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
711
PlumX Metrics