Distributional impact of commodity price shocks: Australia over a century

Bhattacharyya, Sambit and Williamson, Jeffrey G (2013) Distributional impact of commodity price shocks: Australia over a century. Discussion Paper. CEPR, London UK.

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Abstract

This paper explores the distributional impact of commodity price shocks over the both the short and very long run. Using a GARCH model, we find that Australia experienced more volatility than many commodity exporting poor countries between 1865 and 2007. A single equation error correction model suggests that commodity price shocks increase the income share of the top 1, 0.05, and 0.01 percent in the short run. The very top end of the income distribution benefits from commodity booms disproportionately more than the rest of society. The short run effect is mainly driven by wool and mining and not agricultural commodities. A sustained increase in the price of renewables (wool) reduces inequality whereas the same for non-renewable resources (minerals) increases inequality. We expect that the initial distribution of land and mineral resources explains the asymmetric result.

Item Type: Reports and working papers (Discussion Paper)
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HC Economic history and conditions
Depositing User: Sambit Bhattacharyya
Date Deposited: 06 Aug 2013 08:03
Last Modified: 09 Jan 2015 08:13
URI: http://sro.sussex.ac.uk/id/eprint/45823

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